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EU to open arms market

European Union defense ministers adopted a plan Monday to open up their 30 billion euro ($35 billion) arms industry to increased cross-border competition, diplomats said. Although the rules are not legally enforceable, officials said nations would face considerable peer pressure to allow free competition from other EU companies. The EU will monitor application of the system to ensure governments are sticking to the rules.

The new "code of conduct" is voluntary and nonbinding, but it marks a breakthrough for the EU after decades of trying to persuade nations to relax the protection of their tightly guarded national defense markets. By allowing companies to compete more in each other`s markets, the EU hopes to secure lower costs for Europe`s tight defense budgets and encourage a restructuring of the continent`s fractured industry so it becomes more competitive on world markets.

Governments have been able to protect their national defense industry champions because military contracts have been largely excluded from EU legislation that has ripped down barriers to trade within Europe in other sectors. Under the new arms-market system, nations commit to posting defense contracts on an Internet bulletin board open to companies from all EU nations who could then compete for the work.