The European Commission unveiled on Wednesday a plan to open up the defense markets of the 27 member states, aiming to improve the competitiveness of the defense sector.

The commission said the fragmentation of the European defense market and divergent national policies create red tape, hamper innovation and competitiveness.

In a package of initiatives to improve the situation, the commission proposed to introduce specific rules for procurement in the defense sector, which will facilitate cross-border procurement of member states.

Under the current regime, EU procurement rules apply also in defense and security, but member states can exempt contracts in these fields if it is necessary for the protection of their essential security interests.

Up until now, the vast majority of defense procurement contracts have been excluded from the EU single market rules since many member states tend to use the exemption extensively.

As a consequence, most defense and sensitive security equipment is procured on the basis of uncoordinated national rules, which differ greatly in terms of publication, tendering procedures, selection and award criteria, etc.

The commission said this regulatory patchwork is a major obstacle on the way towards a common European defense equipment market and opens the door to non-compliance with the EU rules.

The new legislative proposal is intended to limit the use of the exemption to truly exceptional cases and coordinate national procurement rules. It will apply to the procurement of arms, munitions and war material, as well as related works and services.

"Introducing transparent and competitive procurement rules applicable throughout the Union (EU) is crucial for the establishment of a common defense market. This will lead to greater openness of defense markets between member states to the benefit of all," said EU Internal Market and Services Commissioner Charlie McCreevy.

The commission also proposed to significantly simplify national licensing procedures and therefore facilitate cross-frontier commercial exchanges within the EU.

This patchwork of licensing schemes not only imposes a significant administrative burden on companies, but also induces long lead times up to several months.

Under the commission's proposal, member states are encouraged to replace as far as possible their existing individual licenses by general licenses for those intra-EU transfers.

The commission said it will contribute to making defense industries more competitive and facilitate small and medium-sized enterprises participation into prime contractors' supply chains.

"Opening the internal market for defense products will improve the competitiveness of the technological and industrial base of the European defense sector. This is also fundamental to establishing Europe's autonomy in this field," said European Commission Vice President Gunter Verheugen, responsible for enterprise and industry policy.

The proposals need to be approved by EU member states and the European Parliament