German Chancellor Friedrich Merz is on a roll against European regulation. At every possible occasion, he lashes out at “overregulation,” claiming that it hampers economic growth on the continent, making the European Union unattractive for investment and giving European entrepreneurs a disadvantage compared to Chinese and U.S. competitors. During press conferences at home and abroad, Merz has ardently called for “a true deregulation mindset.”

Merz does the same behind closed doors at European summit meetings with other heads of state and government; according to insiders, he sometimes attacks the European Commission so fiercely that other national leaders step in to defend it. And he does it, of course, when speaking to the German business community that is the bedrock of his center-right Christian Democratic Union.

German Chancellor Friedrich Merz is on a roll against European regulation. At every possible occasion, he lashes out at “overregulation,” claiming that it hampers economic growth on the continent, making the European Union unattractive for investment and giving European entrepreneurs a disadvantage compared to Chinese and U.S. competitors. During press conferences at home and abroad, Merz has ardently called for “a true deregulation mindset.”

Merz does the same behind closed doors at European summit meetings with other heads of state and government; according to insiders, he sometimes attacks the European Commission so fiercely that other national leaders step in to defend it. And he does it, of course, when speaking to the German business community that is the bedrock of his center-right Christian Democratic Union.

As is no doubt Merz’s intention, his message resonates with audiences across Europe: Journalists get strong quotes, Eurosceptics feel reassured that the bureaucratic EU monster is everybody’s main problem, and some of Merz’s colleagues even join the crusade—like Italian Prime Minister Giorgia Meloni did at an informal European summit in February, when both she and Merz promised to shake up a Brussels machinery that churns out rules and proposed an “emergency brake” on new EU regulation.

But how many Europeans know that it often is not Brussels but the EU’s 27 member states themselves that call for more regulation? And how many realize that collective regulation is one of the strongest defensive weapons that Europe has to fend off geo-economic threats from foreign companies and governments trying to undermine the EU?

Yes, it is the 27 member states themselves that are asking for new rules all the time. A classic example is the regulation on the color of car headlights, a contentious issue that played out many decades ago. Why did Brussels interfere with such details? Well, France has always had yellow lights and Germany had white ones. Both countries happened to have large car industries. The problem was that in 1937, France had already legislated that headlights in the country must emit selective yellow light. Foreign visitors with white lights covered them with yellow filters or painted the glass lenses yellow to avoid issues with French authorities.

Because of that, German cars could not be sold on the French market. In the European single market, however, national protectionism is forbidden. Products from other member states cannot be discriminated against. So, Germany complained about the French situation to the European Commission, which acts as the independent arbiter and watchdog for the single market.

In such cases, the European Commission is obliged to examine the complaint. If it identifies a case of discrimination, then it must then draw up a regulatory proposal for all member states on the single market, which they sometimes spend years negotiating. All try to bend the proposal their way, catering to their own national industries, watering it down with opt-outs, exceptions, and transition periods. In the case of the headlights, the result was that white lights became the EU standard from 1993 onward, but cars that were outfitted with yellow lights before that date were still allowed.

This example shows why every piece of EU regulation—essentially compromises of compromises—is incredibly complex. Whether it is about rules for child-friendly lighters, the minimum mesh size of fishing nets, or how many grams of sugar a kilo of muesli may contain on the single market, these are the battles that EU member states fight every day. The economic interests behind them are huge. In the past, European countries waged real wars that were triggered by conflicts spiraling out of control. Today, they go to Brussels for conflict resolution, negotiate for years, and settle for a technical compromise.

Seen in this light, this is pure progress. But often, when a deal is finally announced, citizens roll their eyes: Why does the European Commission, for instance, legislate fragrance labeling on cosmetic products?

At such moments, one would expect national governments like Merz’s to explain that they are behind this, not commission bureaucrats allegedly obsessed with dominating every aspect of European lives. But that seldom happens. Instead of explaining why they chose to regulate, for example, the size of certain bolts or the kind of cream that must be used in ice cream, they blame Eurocrats. Many citizens, who do not know that national governments make almost all decisions in Brussels, swallow it hook, line, and sinker.

For a long time, the British were amongst the largest demanders of Brussels regulation. As an EU member state (until it left the bloc in 2020), the United Kingdom saw the single market as the EU’s main attraction. It disliked political integration, putting all effort into fostering trade, pushing enlargement (a larger market would benefit U.K. companies), and eliminating trade barriers on the single market. Whenever the U.K. found such barriers, it would complain in Brussels—for example, a German guild not admitting foreign members, or any piece of national or regional red tape that discriminated against foreign companies. Yet, when the fight against European red tape later became a dominant feature of the Brexit campaign, the U.K. government never took responsibility for its proactive role. It just stepped back to “let the people decide.”

In his 2023 book, What Went Wrong With Brexit and What We Can Do About It, journalist Peter Foster argued that the government should have praised EU regulation as the “bureaucratic oil that greases the wheels of trade.”

Today, EU single-market regulation is Europe’s most powerful tool. Any company wanting to do business in the EU needs to comply. That means Asian toy factories, U.S. data giants, and African flower growers need to follow European chemical regulations, data protection rules, and sanitary procedures thousands of miles away. Those EU rules, voted on by European politicians, contain European values: no hormone meat, no child labor, no animal testing, no toxic plastics, and so on. As law professor Anu Bradford has written in her influential 2019 book, The Brussels Effect: How the European Union Rules the World, companies active in several jurisdictions with different rulebooks tend to follow the strictest jurisdiction so that they are good everywhere. And the world’s strictest rules are often EU rules. Many companies cannot afford to be shut out of one of the largest and richest markets in the world.

So, EU rules are in use all over the world. They project European values and soft power across the globe. They also increasingly shield Europe against geo-economic blackmail and bullying. For all these reasons, many non-EU countries in Europe—from Norway, to Switzerland, to Ukraine—tend to copy single-market rules.

Today, large foreign powers are piling pressure on the EU, trying to destroy its rules and kill the Brussels effect. The United States wants the EU to scrap regulation for U.S. data and pharmaceutical companies, threatening higher tariffs on EU imports if it does not comply. China floods the EU with cheap state-subsidized products, putting EU companies at a disadvantage. Those companies are now telling politicians like Merz that too much regulation from Brussels is the problem.

Their difficulties are real. But the solution is not scrapping EU rules. It is reinforcing them.

In all bureaucracies, dead wood needs to be cut once in a while. Every few years, there are attempts to do this in Brussels. A few years ago, the European Commission tried to suppress new legislation, with some success. But then Russia invaded Ukraine, and new laws on security had to be drawn up. Then, in early 2025, member states tasked a working group with simplifying complex legislation in various areas. This exercise led to some simplification in EU law, which some conservative governments like Merz’s applauded. But it ran into considerable opposition from civil society groups.

The worry is not just that environmental and health standards are being jeopardized. It is also that if Brussels scraps rules, then it loses the power to discipline companies, including foreign ones. This would be the Trump administration’s dream scenario. But if Brussels reinforces its rules instead (or better yet, smartens them up), Europeans will continue to be able to decide what kind of Europe they want to live in and how they want companies—European and foreign—to behave.

According to the latest Bertelsmann EUpinions poll, European citizens want Europe to be more powerful and more autonomous, not less. They do not want to be at the mercy of U.S. and Chinese companies. But there is only one way to prevent that: EU member states must deepen and strengthen the single market, breaking down the many national barriers that still exist. And unfortunately for Merz, this will clearly mean more EU regulation, not less.