The EU has quietly dropped plans for stronger environmental inspections to tackle illegal trade in wildlife and toxic waste across Europe, the Guardian has learned.

Senior levels of the European commission feared opposition from the UK to the proposed law on cost and red tape grounds, sources told the Guardian.

The environmental inspections directive, seen by the Guardian, would have forced countries to set up monitoring and inspection regimes at entry points around Europe, and empowered EU experts to visit sites, offering advice and adjudication in disputes.

The legislation would have involved inspections targeting industrial waste, hazardous chemicals, air toxins and groundwater pollution. As the economic crisis bit, many European states cut their environmental budgets and inspection departments to the point where countries such as Belgium only had two officials enforcing inspection rules.

“We wanted to increase the number, quality and consistency of inspections for everything going into and coming out of the EU,” one EU source said. “But the secretary-general [Catherine Day] thought it was interfering too much in the details and she took it out.”

The EU president José Manuel Barroso had promised to be “big on the big things and small on smaller things,” and the legislation had wrongly been seen as a small thing, the source said.

Another official told the Guardian that there was a fear that “the UK would say this is a national competence and there should be no more transfer of powers [to Brussels], but the decision also had to do with costs – or alleged costs.”

Some say the real problem is that environmental crime in Europe has become too big to deal with. Soil in 2.5m European sites has been contaminated, often by illegal dumping according to commission research. The remediation costs from this are thought to run into trillions.

Another 7.4m tonnes of waste are illegally transported out of the EU each year, often to be dumped in developing countries. Interpol estimates the value of the illegal wildlife and timber trades at between $70bn-$213bn (£46-£140bn) annually.

“For many east European member states the directive would have meant an administrative burden,” an EU source said. “They were afraid that once you started monitoring the environment, you’d get more complaints, and more prohibitions.”

Romania, Hungary, Greece and Spain have still not implemented an EU illegal timber regulation passed five years ago, according to a damning court of auditors report published last month.

While not directly targeting timber, the proposed directive would have mandated inspections, surveillance and enforcement work that could have identified breaches of the law by timber smugglers.

It would also have ensured that competent authorities were able to carry out these duties in every European country in a coordinated fashion.

“The objectives of the proposal cannot be sufficiently achieved by the member states,” the directive says. “To the extent that some types of non-compliance have a trans-boundary character, the absence of a common approach will hamper effective cooperation between member states.”

Officials say that in the current climate, the proposal is unlikely to be revived. “Everything has to be in tune with political priorities of this commission and I don’t think that environmental inspections are among those,” an official said.