"Opening the internal market for defense products will improve the competitiveness of the technological and industrial base of the European defense sector," Commission Vice President Günter Verheugen said in a statement.

Verheugen also stressed that he saw the move as "fundamental to establishing Europe's autonomy in this field." With the EU lagging far behind the US in defense spending, he said that public opposition to increasing expenditure in this sector meant that the EU had to spend more efficiently.

Defense is the exclusive domain of the bloc's 27 member states. But Verheugen said the policy came under the EU's single market powers, and was not a defense policy per se.

Stopping countries avoiding competition law

The proposals tabled by the commission are designed to discourage countries from using a national defense clause to buy military and spare parts and avoid EU procurement rules. They would not impact on the purchase of arms, munitions and war materials or other sensitive non-military procurements in areas such as counter-terrorism.

The initiative is also intended to co-ordinate different national procurement rules, which have proved a major hurdle. Verheugen, who is also Industry Commissioner, said the complex mix of national legislation and controls on the transfer of defense equipment currently in place had even helped encourage the mass use of the exemption.

"If you just want a spare tyre, for example, for a defense vehicle, you've got to go through the same authorization procedure as if you were selling a gun outside the European Union," he explained.

He said the new measures would apply "perhaps not to the whole tank but for example the spare tyre. Not to a mortar or motor for a fighter plane, but for components or spare parts."

Measures to boost transparency and cut red tape

Internal market and services commissioner Charlie McCreevy said: "Introducing transparent and competitive procurement rules applicable throughout the 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: armed forces, taxpayers and industries."

He said the commission would have the same powers to fine non-compliant member states as in other areas of EU policy.

The European Defense Agency, formed in 2004 to help EU member nations improve their military capabilities, welcomed the Commission's plans, even though its own attempts to achieve similar results have borne little fruit.

"The European market for tanks does not operate in the same way as the market for washing machines," said new EDA chief executive Alexander Weis.

Europe's defense industry accounts for around 30 percent of world production and has more than 300 000 employees, according to Commission figures.