The practice of discards must be phased out, the Commission says. In future trawlers will have to land their entire catch - and that means member states will have to ensure that better technology is installed to monitor compliance.
The Commission says fisheries should be managed on an "ecosystem" basis - there needs to be more flexibility in the system and more scientific data needs to be collected on a larger number of fish species.
The parliament's lead negotiator, German Social Democrat Ulrike Rodust, says the EU should scrap the annual bargaining over quotas, replacing that with an eco-friendly system based on "maximum sustainable yield" (MSY). Under MSY, there would be a limit to the catch for each species based on its reproduction rate - in other words, the rate at which the stock is replenished. Ms Rodust accepts that for MSY to become the benchmark in 2015, as outlined in her legislative report, more scientific data will be needed.
A new funding mechanism will be set up for 2014-2020 called the European Maritime and Fisheries Fund (EMFF), with a budget of 6.7bn euros (£6bn).
Part of that fund will help support small-scale coastal fleets. Member states will be able to restrict fishing in a zone within 12 nautical miles of the coast, up to the year 2022.
But Ms Rodust's report objects to some Commission proposals to make fishing more market-driven. The Commission said large fleets should be allocated transferable catch shares, called "concessions", which they would be able to trade, in response to local conditions. Ms Rodust argues that such choices should remain in the hands of national authorities, not the EU.
She does not want "an allocation system being imposed at European level", and instead "member states will remain free to establish - or not to establish - a system of transferable fishing concessions".
The objective of the reformed fisheries policy is to end overfishing and make fishing sustainable - environmentally, economically and socially. The new policy aims to:
• bring fish stocks back to sustainable levels by setting fishing opportunities based on scientific advice,
• provide EU citizens with a stable, secure and healthy food supply for the long term,
• bring new prosperity to the fishing sector, end dependence on subsidies and create new opportunities for jobs and growth in coastal areas.
The European Commission view is that that the current policy is wasteful - 75% of stocks are still overfished and catches are only a fraction of what they were 15-20 years ago. Catches of cod for example have declined by 70% in the last 10 years.
The Commission believes that the "top down" system of micro-managing fisheries from Brussels is failing and that decision-making needs to be decentralised.
The method of allocating fishing quotas EU-wide has contributed to the serious depletion of stocks, the Commission says. Crews that haul in more than the agreed quota often throw large quantities of dead fish back into the sea - the much-criticised "discards".
The system is not meeting the European market's needs. Fish imported from non-EU countries now accounts for two-thirds of the fish sold in the EU.
Originally the Commission wanted the new CFP to be in place by 1 January 2013, but the timetable has slipped. MEPs now hope to reach a final deal on the reforms with the Council (EU governments) in June.
The plan is to start adopting the MSY approach to fisheries management in 2015, and from 2014 discards are to be phased out.