John Whelan: New packaging regulations a nightmare for small firms
The EU’s new PPWR (Packaging and Packaging Waste Regulations) came into effect on August 12.
The EU Packaging and Packaging Waste Regulations (PPWR) which became effective from August 12, is proving a nightmare for small business and particularly e-commerce businesses.
While the waste recycling and labelling rules in the regulation don’t actually apply until 2028 to 2030, right now businesses are required to register and pay compliance fees in every EU country they currently ship to, regardless of the size of their operation, with costs ranging from €300 to €1,100 per market per year.
There has been a howl of protest from small businesses in Ireland saying the regulations will make it near impossible for them to continue selling into other EU countries. Of the 500 complaints registered so far by small companies across Europe, 40 have come from Ireland.
BabaBarock Ltd is a typical of a wide range of small businesses who have complained to the European Commission since the Regulation became effective.
Established in 2002 by husband and wife Karen Mahony and Alex Ukolov in Killarney, employing four people, they have put a lot of effort over many years into building up customers across Europe, and say these regulations are making it impossible for them to sell to most EU countries as the admin and financial cost is simply too high.
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Ciara Costelloe who runs a micro business Decking Awesome Games, is another typical business owner who has registered a complaint to the Commission.
She states: “I run a micro business in Ireland that sells a few handmade products a year. I use a lot of recycled packaging from packages I received. Amazon is asking me to provide all sorts of information with which I can’t comply. I have emailed Repak and I have heard nothing.
“My Amazon listing is about to be removed and really my hopes of testing the market to find a product that is popular seems impossible with these regulations.
Experts and small businesses agree that the main sticking point of these new rules is the fixed costs, which are the same for small businesses as for large corporations. The difficulty is PPWR creates compliance costs charged per country sold to or imported from, not by parcel or revenue per sales unit, with small firms such as BabaBarock and Decking Awesome Games having to pay the same fees as big corporations such as Amazon.
EU officials advise that initially the regulations do not require businesses to redesign packaging or switch materials overnight, the initial rules focus on who is responsible for the packaging entering the EU market and proving it with paperwork.
However, for small businesses this brings an enormous dose of admin and paperwork. In practice, it involves issuing a declaration for each type of packaging they use and registering with each EU state’s Extended Producer Responsibility scheme individually, as there’s no EU-wide registration. Most states also require sellers to appoint an in-state “authorised representative” to handle registration on their behalf.
Adding to the worries for small business is action by marketplace platforms such as Amazon, who are now actively checking that all sellers on their platforms are compliant with the EU Regulations and have the power to remove any non-compliant online listings.
And, as one small business owner stated:
With the cost of staying compliant often exceeding profit margins on low- volume sales, the burden of PPWR is landing hardest on businesses that are least equipped to absorb it: Small exporters are being forced to make difficult decisions, from scaling back EU trade to dropping out of the market for the foreseeable future.
Most British manufacturers trading with the EU and Ireland will also have to comply with the PPWR. Small UK firms may decide it is too much hassle to continue trading with the EU, which will further impact small Irish businesses relying on imports from the UK.
The latest information from Brussels is that the commission is discussing exempting EU-based micro businesses from some of the regulation’s requirements, such as having an authorised representative in each country. But much more will be needed to take the load off small businesses and encourage them to keep trading across the 27 member states.
