This article takes a comparative look at how the world's two largest economies are diverging in their approaches to regulating hazardous products and packaging, with major ramifications for manufacturing, waste management and trade. The European Union is implementing product oriented environmental regulation based on the principle of Extended Producer Responsiblity (EPR), which assigns responsibility to manufacturers to take back their products after consumers discard them. In theory, EPR could dramatically alter production practices by internalizing product externalities and providing incentives for environmentally friendly design. However, practical problems of implementing raise questions about the effectiveness of EPR as a policy tool.

This article examines the European experience with EPR, the reasons for apparent resistance to EPR in the United States, and the implications of a move toward product-oriented environmental law. It concludes that the transaction costs of EPR may outweight its environmental benefits and that EPR may not provide the expected design incentives. It therefore recommends that the United States consider alternative policy instruments to address environmental externalities from products.