The ruling was a response to a case filed in 2003 by the Office of the US Trade Representative (USTR) arguing that the European Union had placed an effective moratorium on biotech crop imports between June 1999 and August 2003.
The US, Argentina and Canada argued these prohibitions were not scientifically justified and thus contrary to WTO rules. The US food industry has persistently said that the EU ban has cost them some $300 million a year in lost sales.
The EU on the other hand has consistently denied the existence of a moratorium, citing that no official communication to this effect has ever been made.
"Contrary to US claims, the EU is one of the largest importers of GMOs and derived food and feed," said the Commission in a statement this week. "The EU is the largest soybean and soy meal importer and the fact is that soy imports consist largely of Monsanto Round-Up Ready soybean, which is cultivated in all the main soybean global producers, i.e. the US, Brazil and Argentina."
"The claim that the there is a moratorium on approval of GM products in Europe is self-evidently untrue."
However, the Grocery Manufacturers Association (GMA), which represents a large number of major US food makers, has said that it backs the WTO decision.
"The WTO's decision makes it clear that biotech regulations must be based on sound science and that the EU's approach to biotech crop approvals is unwarranted," said GMA senior director of international trade Sarah Thorn.
Europe's position is that a tough regulatory framework must be in place in order to carry out strict monitoring of GM products after their initial release to market.
"The US appears not to like the EU authorization regime, which it considers to be too stringent, simply because it takes longer to approve a GMO in Europe than in the US," said the Commission.
"The EU believes that such regulatory oversight is of utmost importance to address any potential failure of the regulatory system, such as those that have been experienced in the US in the recent past when non-approved GMOs such as Starlink GM maize, or Bt 10 GM maize entered the US food chain."
In any case, the WTO ruling may prove more symbolic than effective, given that the EU claims it has no ban on safe GM products. More importantly, widespread consumer rejection of GM products will likely mean that the technology remains untouchable for many manufacturers and retailers.
It is clear that Member States still need to be convinced that introducing genetically modified ingredients into food production is acceptable. The Commission has asked EU members over ten times to vote on authorizing a GMO food or feed product, but in the large majority of cases, there was no agreement or simple deadlock.
Luxembourg, Greece and Austria consistently vote against GMO approvals.
Both sides now have one week to ask the panel for a review of the interim report. The period of review must not exceed two weeks.
During that time, the panel may hold additional meetings with the two sides.
A final report submitted to the two sides will become the Dispute Settlement Bodys ruling or recommendation, unless a consensus rejects it.
Having lost, the EU must follow the recommendations of the panel report or the appeals report. It must state its intention to do so at a Dispute Settlement Body meeting held within 30 days of the reports adoption.
If complying with the recommendation immediately proves impractical, the EU will be given a reasonable period of time to do so. If it fails to act within this period, it will be subject to retaliation measures and will have to enter into negotiations with the US, Canada and Argentina in order to determine mutually-acceptable compensation for instance, tariff reductions in areas of particular interest to the complaining side.
Public opinion in Europe is still firmly against GM. The ruling will probably not lead to an increase in GM imports in the short term. But trade sources argue that the ruling is still vitally important because it sends a message to other WTO members, which have been taking a similar line to that of the EU, and could now face legal action.
In a written statement, GMA also highlighted its opposition to the EU's traceability and labeling scheme for biotech ingredients.
"WTO standards require that all members base their regulations on science, and we believe that the EU's traceability and labeling requirements are equally flawed. The EU has ignored this mandate by implementing a biotech labeling scheme that is based instead on politics," said Thorn.
"While the WTO's most recent ruling eases one barrier to trade, the EU traceability and labeling requirements will continue to limit trade opportunities without justification," she added.