The World Trade Organization, in a closely watched ruling, decreed on Tuesday that the European Union and six member states broke trade rules by barring entry to genetically modified crops and foods, diplomats said.

The preliminary decision, contained in a confidential verdict sent to the parties to the dispute, followed a complaint against the EU brought by the United States, Argentina and Canada.

In a 1,000-page report, which diplomats said they were still seeking to digest, WTO trade judges said the EU applied an effective moratorium on GMO imports for six years from 1998. Moratoriums are barred under WTO rules.

"The panel confirmed that there was a moratorium, and that is not allowed," said one diplomat who had seen the findings.

"Members' safeguard measures have also been condemned," he said in reference to the complaint against individual market and import bans imposed by France, Germany, Austria, Italy, Luxembourg and Greece.

But diplomats said that other parts of the WTO ruling, which also covered individual crops and foods, were more mixed, although they were still wading through the detail.

Diplomats and industry watchers had forecast the EU could come off worst in the case in which the three complainants argued that the moratorium on GMO approvals hurt their exports and was not based on science.

The ruling was keenly awaited by the world's biotech industry which would like to ship far more GMOs to Europe.

Europe's shoppers are known for their wariness toward GMO products, often dubbed as "Frankenstein foods". Opposition is estimated at more than 70 percent, a stark contrast to the United States where they are far more widely accepted.

U.S. farmers say the EU ban cost them some $300 million a year in lost sales while it was in effect since many U.S. agricultural products, including most U.S. corn, were effectively barred from entering EU markets. - REUTERS