The proposals stem from a call by the International Council for the Exploration of the Sea (ICES), which in 2005 demanded a complete overhaul of deep-sea fisheries in the northeast Atlantic.
If the Commission's proposals are adopted by the EU's legislators, the measures could reduce the domestic supply of cod and result in processors having to look more and more for imports from non-EU countries.
The two cod fishing areas in the Baltic Sea have been harvested at unsustainable levels for years, ICES scientists have warned.
The eastern stock of cod has been fished to the brink of collapse and the western stock has been producing below potential considering that the region accounts for 60 per cent of the EU's production, the Commission said.
The Commission measures to curb the Baltic decline includes setting maximum levels on the amount of fish caught.
The measure, called Total Allowable Catches (TACs), will reduce fishing mortality by 10 per cent a year until a target mortality rate is achieved, the Commission said.
Target mortality rates for the Western Baltic cod and the Eastern Baltic cod have been set at 0.6 and 0.3 respectively.
Total fluctuations in TACs will not be able to exceed a 15 per cent rise or fall annually. The scientists believe these levels will aid the rejuvenation of the Baltic stocks while still allowing commercial fisheries to survive.
The Commission noted that there were persistent problems with member countries and fisheries underreporting catch levels. The ICES believes that underreporting may be as much 45 per cent in the eastern stock catch area alone.
The Commission has also proposed a ban on cod fishing with nets larger than 90mm. The period of the ban would be from 15 March to 14 May in the western Baltic and 15 June to 14 September in the eastern Baltic.
An annulment of the closed periods will be available to small-scale coastal fisheries that have boats less than 12 metres in length.
The Commission has largely heeded the advice of the ICES to drastically cut back on fishing levels allotted to deep-sea fisheries until the cod stocks can be proven to be sustainable, said Joe Borg, head of the Commissions' fisheries and maritime section.
"This multi annual plan is firmly in line with our commitment to implementing a long term approach to returning fish stocks to levels that will provide stable returns year after year while allowing fishing activities to continue," Borg stated in a press release. "It confirms our approach to ensuring the biological, economic and social sustainability of our fisheries."
The Scottish Fisherman's Federation has already described the measures as "draconian" and unfair to the Scottish fleet that had to accept a 15% cut in quotas this year already.
The cuts will likely make it harder for EU countries to compete with the influx in frozen Cod being imported more and more from China.
Earlier this month the Commission suggested that the bloc adopt a maximum sustainable yield policy (MSY) to control overfishing for all fish species and reduce production.
Maximum sustainable yield is the highest yield that may be taken from a fish stock without lowering its productive potential for future years.
If too much fishing takes place, the stock concerned will decrease and, as a result, catches too will subsequently decline. Most European fish stocks are now overfished, the Commission stated.
In 2002, EU member states made a commitment to maintain or restore fish stocks to levels that can produce at MSY no later than 2015.
According to a Food and Agriculture Organisation forecast last month frozen cod fillet prices are expected to remain largely stable in European markets in the second half of this year.
Part of the downward pressure on prices is due to the increasing supplies from low cost China and the weak US dollar. The forecast will come as some relief for processors.
However, a cut in the domestic supply as proposed by the Commission would increase the reliance on overseas suppliers.