This article explores problems surrounding the implementation of European Union (EU) environmental policy within Member States. It focuses on harmonization and flexibility within the implementation process, from both a free-trade and an environmental perspective. The context is the Packaging Waste Directive, legislation requiring Member States to establish packaging waste recycling systems. The directive has encouraged Member States to employ economic instruments in the implementation process, a strategy which has led to the development of various national packaging waste systems. As a result, differences between the British and German approaches to environmental policy have become apparent, despite the adoption by both of systems based on economic instruments. The two national models are contrasted and the extent to which flexible implementation has produced harmonized legislative standards, threats to free trade, and improved environmental quality are reviewed. The article proposes that where relatively peripheral conflicts between the operation of the single market and environmental policy objectives occur, genuine environmental protection measures should not automatically be impeded by free-trade technicalities.