🚨 EU Packaging Rules Get Stricter
Today Korean Economic News for Beginners | 2025.09.20
0️⃣ Korean Export Companies Face Barriers to $95 Trillion Market
📌 Risk of EU customs blocking over one package, small companies may give up exports
💬 The European Union (EU) will start fully enforcing packaging and packaging waste regulations (PPWR) from August next year, creating new challenges for Korean export companies. These rules require tough environmental standards like recyclability, mandatory use of recycled materials, and bans on over-packaging. Companies that don't meet these standards will be completely blocked from selling in the EU. There are growing concerns that Korea's annual $95 trillion worth of exports to the EU could be blocked by packaging issues alone. Big companies like Samsung Electronics and LG Electronics have started redesigning their processes, but small companies are considering withdrawing from the EU market due to the cost burden of compliance. While the government is preparing business support measures, time is running short and industry concerns are deepening.
1️⃣ Easy to Understand
The EU has introduced strict rules about packaging to protect the environment, and this is causing big problems for Korean export companies. Something as simple as packaging could close the door to the huge EU market.
Let me explain what PPWR is first. This is a packaging-related regulation created by the EU to protect the environment, and it will be fully implemented from August 2026. Until now, each country applied different standards, but from now on, the same strict standards will apply throughout the entire EU.
This regulation has three main points. First, only recyclable packaging materials can be used. Second, a certain percentage of packaging materials must be made from recycled materials. Third, over-packaging is banned. For example, empty space inside packaging cannot exceed 50% of the total.
The problem is that these conditions are tougher than expected. For instant noodles, the container, lid, and plastic wrapping are all made of different materials, making recycling difficult. Cosmetic samples are also restricted because their small size makes separation difficult during recycling processes. Styrofoam packaging that protects electronic products must also be changed to paper or other eco-friendly materials.
The paperwork is even more complicated. Export companies must write a 'Declaration of Conformity' stating that their packaging meets the regulations, and they must also prepare 'Technical Documentation' containing detailed ingredients and test results. When EU authorities request these documents, companies must be able to submit them immediately, and if they're not ready, sales will be stopped.
Big companies have already started responding. Samsung Electronics is replacing product packaging with eco-friendly materials, and LG Electronics is also redesigning packaging processes. But these changes take several months and cost a lot of money.
The biggest problem is for small companies. The cost of changing packaging and getting certification can be too high compared to their sales. Some small companies are even deciding that "it would be better to give up EU exports."
In the end, regulations with the good intention of protecting the environment are acting as new trade barriers for our companies.
2️⃣ Economic Terms
📕 PPWR (Packaging and Packaging Waste Regulation)
PPWR is a comprehensive packaging regulation introduced by the EU to protect the environment.
- It was finalized in 2024 and most provisions will be implemented from August 2026.
- Key contents include recyclability, mandatory use of recycled materials, and bans on over-packaging.
- It is a mandatory regulation that applies to all product packaging sold within the EU.
📕 Declaration of Conformity
A Declaration of Conformity is a document where manufacturers guarantee that their products meet EU regulations.
- In English, it's called Declaration of Conformity (DoC).
- It must be written before selling products and submitted immediately when requested by authorities.
- False declarations can result in sales suspension, recalls, fines, and other punishments.
📕 Technical Documentation
Technical documentation is detailed data recording product design, ingredients, test results, etc.
- It's short for Technical Documentation (TD) and serves as the basis for the Declaration of Conformity.
- It must include packaging material composition, recyclability, toxicity test results, etc.
- It must be kept for at least 10 years, and failure to submit it during official investigations results in severe punishment.
📕 Non-tariff Barriers
Non-tariff barriers are trade regulations that restrict imports through methods other than tariffs.
- Technical specifications, environmental standards, and safety regulations are typical non-tariff barriers.
- While they appear to have reasonable purposes on the surface, they actually have the effect of blocking foreign products from entering markets.
- They are allowed under WTO rules but can cause trade disputes if excessive.
3️⃣ Principles and Economic Outlook
✅ Environmental Regulations Becoming Trade Barriers
Let's analyze how EU packaging regulations are acting as trade barriers beyond environmental protection.
First, environmental regulations are legitimate non-tariff barriers. In the past, the EU has continuously strengthened regulations under the name of environmental protection through REACH (chemical registration regulations), RoHS (restriction of hazardous substances), etc. These regulations appear to have reasonable purposes of protecting the environment and human health, making them difficult to challenge at the WTO. However, they actually have the effect of making it difficult for foreign companies to enter markets. Asian companies especially feel a greater burden because they use different production methods and materials than Europe.
Second, regulatory adaptation costs work differently depending on company size. Large companies can form dedicated teams and invest hundreds of millions of won to meet regulations, but small companies don't have such capacity. Even changing one packaging material takes at least 6 months from design to prototype production, certification, and mass production. For small companies with only billions of won in annual EU exports, it's difficult to handle such costs and time, leading to natural withdrawal from the market. As a result, market concentration increases and EU domestic companies' competitiveness is relatively strengthened.
Third, EU influence grows through global spread of technical standards. Since the EU is the world's second-largest economic bloc, products made to EU standards are likely to become global standards. This is called the 'Brussels Effect,' where EU regulations influence industry standards worldwide. Korean companies must eventually change their production processes to meet EU standards, and during this process, EU companies can secure technological advantages.
While environmental regulations have reasonable purposes, they are actually being used as powerful trade protection tools.
✅ Korean Companies' Response Strategies and Limitations
Let's look at how Korean export companies are responding to PPWR and what difficulties they face.
First, large companies are responding to regulations through proactive investment. Samsung Electronics started replacing product packaging with eco-friendly materials from 2023. They reduced plastic in smartphone packaging, increased the ratio of recycled paper, and changed cushioning materials to eco-friendly materials. LG Electronics is also completely redesigning home appliance packaging, and Hyundai Motor is increasing the use of recycled plastic in automotive parts packaging. These companies are systematically responding by mobilizing R&D teams and quality control teams, and are expected to pass regulations without major problems.
Second, small companies face great difficulties due to lack of cost and technical capabilities. A small company exporting cosmetics complained, "To change sample containers to eco-friendly materials, the minimum order quantity is 100,000 pieces, but our annual usage is only 30,000 pieces, so we'd have to keep 70,000 pieces in inventory." Food packaging is the same. If ramen or snack packaging is changed to recyclable single materials, preservation may deteriorate and shelf life may shorten. However, small companies lacking the technical capability or R&D capacity to solve these problems are deciding to "rather give up EU exports."
Third, the complexity of certification and documentation work is also a big burden. To apply PPWR, all components of packaging materials must be analyzed, recyclability must be tested, and this must be documented. This work requires specialized personnel and testing equipment, which is difficult for small companies to handle independently. If outsourced to external specialists, it costs millions of won per product and takes 2-3 months just for testing. Moreover, if packaging materials are changed even slightly, recertification is required, causing continuous cost burdens.
As the response capacity gap grows according to company size and capabilities, Korean small companies' access to the EU market is expected to be greatly restricted.
✅ Industrial Structure Changes and New Opportunities
Let's analyze the long-term impact of PPWR introduction on Korean industry and newly created opportunities.
First, explosive growth in the eco-friendly packaging industry is expected. As regulations strengthen, demand for recyclable packaging materials and biodegradable materials will explode. In Korea, SK Chemicals' biodegradable plastics, Kolon Industries' recycled PET, and Hansol Paper's eco-friendly packaging paper are attracting attention. These materials are more expensive than existing packaging materials, but they can guarantee high profits as they become essential due to environmental regulations. Companies that secure technology are also expected to have more overseas expansion opportunities.
Second, packaging design and process innovation become new competitive factors. To simultaneously satisfy over-packaging bans and improved recyclability, packaging design itself must be innovated. Technology for packaging with minimal materials while maintaining product protection functions, and structural design that allows easy separation of multiple materials become important. Companies that secure technology in these areas can create new revenue sources through consulting or licensing. In fact, Japan's Toppan Printing has achieved great success in the European market with separable packaging technology.
Third, regionalization of global supply chains may accelerate. Meeting complex environmental regulations requires close cooperation between packaging material suppliers and manufacturers. This makes cooperation between geographically close companies advantageous, and global supply chains are likely to be divided by region. For Korean companies, while EU entry becomes difficult, new opportunities can be found in regions with relatively loose environmental regulations like Southeast Asia or Latin America. Also, in the domestic market, foreign competitors' entry becomes difficult, so domestic companies' competitiveness may be relatively strengthened.
While short-term cost burdens and market accessibility restrictions are significant, long-term opportunities to create new growth engines and competitive advantages may emerge.
4️⃣ In Conclusion
The EU's strengthening of packaging regulations will be both a short-term crisis and a long-term transformation opportunity for Korean export companies. It's a complex situation where both the risk of being pushed out of the huge $95 trillion market and the opportunity to lead new eco-friendly industries exist simultaneously.
The most urgent problem is small companies' lack of response capacity. Large companies have already begun organized and systematic responses, but small companies are considering giving up the EU market due to lack of cost and technical capabilities. This is not simply an individual company problem but could negatively affect the diversity and competitiveness of Korea's export structure.
Government support measures are important but their effectiveness is questionable. Certification cost support or consulting service provision alone cannot fundamentally solve the problem. More important is building industry-academia-research cooperation and technology sharing platforms for eco-friendly packaging development. A system is needed where small companies can jointly research and share results on technical problems that are difficult to solve individually.
On the other hand, these regulations could become an opportunity to accelerate qualitative transformation of Korean industry. This is because securing competitiveness based on technology and innovation has become inevitable, moving away from export structures that relied on price competitiveness. If world-class competitiveness is achieved in areas like eco-friendly material development, packaging design innovation, and process efficiency, new growth engines can actually be secured.
What's important is not passively responding to regulations but proactively developing technology and preempting markets. EU regulations are just the beginning, and other developed countries like the US and Japan are likely to introduce similar environmental regulations. Companies that prepare from now will be able to seize leadership in future global markets.
Ultimately, this crisis will be a turning point for Korean companies to move from 'quantitative growth' to 'qualitative transformation.' Only companies that endure short-term difficulties and continue investment and innovation from a long-term perspective will be able to survive in the new global competitive environment.
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