Brussels Defect Instead of Brussels Effect

Working in conjunction with the wvib Schwarzwald AG (Wirtschaftsverband Industrieller Unternehmen Baden), a federation of industrial companies based in the German region of Baden, cep surveyed 40 relevant companies. Over two thirds of the participants are required to apply EU product standards - at least in some cases - even when selling their products in third countries. Around 70 per cent view this as detrimental to their company’s sales. Over 90 per cent of companies report higher production costs. "The Brussels Effect is not a competitive advantage," says cep economist Matthias Kullas. "From a company perspective, especially in the case of product specifications, any potential benefits are outweighed by the cost increases and loss of flexibility."

The assessment is more nuanced when it comes to EU process requirements, such as environmental protection, data protection and health and safety. Here, international coverage is lower and the acceptance rate higher. 27.5 per cent of companies even consider the global application of such standards to be advantageous, primarily due to more uniform competitive conditions and greater legal certainty.

An accompanying analysis of around 200,000 EU documents from the period 2012 to 2025 also shows a clear discrepancy between the EU's own political narrative and the competitive reality as perceived by companies. Strategic papers predominantly present the Brussels Effect in a positive light, while making hardly any reference to costs or burdens.

"Politically, the Brussels Effect is communicated, first and foremost, as a strategic advantage," says Anselm Küsters, Head of Digitalisation and New Technologies. "The potential economic burdens for companies remain in the background."

"For the Brussels effect to become a real competitive advantage, we need practical regulations that are compatible with small and medium-sized enterprises," says Hanna Böhme, CEO of wvib Schwarzwald AG. "European regulations must work in an international competitive environment, otherwise they will hamper value creation on the continent."