(GENEVA) - The WTO on Thursday upheld a European Union ban on imports of seal products, rejecting an appeal by Canada and Norway, in a landmark ruling that said animal welfare can trump trade.

The World Trade Organization's appellate body said that Brussels did not breach the rules of global commerce when it imposed its ban in 2010.

The global body has never before issued a final decision on how to square animal welfare with international trade regulations, and observers have said the case therefore marks a watershed.

The WTO's disputes settlement panel -- which like the appellate body is made up of independent trade and legal experts -- had issued a similar ruling last November, but Norway and Canada appealed.

"The Appellate Body upheld the Panel's finding that the EU Seal Regime is 'necessary to protect public morals'," the WTO said in a statement Thursday.

The WTO polices global trade accords in an effort to offer its 159 member economies a level playing field, and can authorise penalties against wrongdoers, such as retaliatory tariffs.

But the appellate body, whose decision is final, dashed Canada and Norway's hopes of a blow against the EU.

- Concerns over hunting -

Brussels argues that the EU public strongly favours the ban due to concerns over hunting methods such as using a club with a metal spike -- a "hakapik" -- to stun seals before killing them, and has presented what it says is convincing scientific evidence that such methods are cruel.

Norway and Canada had deployed counter-arguments from scientists to knock down EU claims, insisting that seal hunting is no worse than commercial deer-hunting, which is widespread in the EU.

"Canada's position has been that the eastern and northern seal harvests are humane, sustainable and well-regulated activities that provide an important source of food and income for coastal and Inuit communities," Trade Minister Ed Fast insisted in a statement.

Like the disputes settlement panel before it, the WTO appellate body ruled that while there was merit in Norway and Canada's complaints that their seal trade was being affected, this was outweighed by the EU goal of addressing moral concerns about seal welfare.

Opponents of allowing the moral argument to stand have argued that it will open a Pandora's box for other countries that want to deploy it.

After the verdict, Canada renewed its criticism of the ban, with the trade minister insisting it was "unfair" and based on "a political decision that has no basis in fact or science."

Norway meanwhile appeared to be in denial of what the ruling meant.

"We are pleased that the appellate body has concluded that EU's rules on trade of seal products violate WTO's basic principles about non-discrimination," Foreign Minister Boerge Brende said in a statement, although he acknowledged that Oslo's claim had not won forth "on all points."

The EU ban applies to commercial hunting from Norway as well as the Canadian provinces of Newfoundland and Quebec.

Canada has set a seal hunt quota of nearly 470,000 of the sea mammals this year although its some 6,000 commercial hunters last year culled fewer than 100,000 of the animals.

And Norway has set a quota of more than 28,000 seals for 2014, but also rarely meets its quotas.

- Inuit hunters exempt from ban -

The EU ban does contain exceptions for Canada's indigenous Inuits and Inuvialuit peoples from the province of Nunavut, but they argue that the market for their seal products has been seriously affected by the overall embargo.

Kalaallit hunters from Greenland are also exempt -- their homeland is an autonomous territory of EU member Denmark, but is not part of the 28-nation bloc.

The indigenous Inupiat and Yupik communities in the US state of Alaska, and the Yupik of Russia are also allowed to trade seal products with the EU.

Canada and Norway said the exemptions were unfair for non-indigenous hunting communities -- and that the scale of the Greenland hunt was tantamount to commercial sealing.

The appellate body declined to rule on that particular issue, but went a step further than the original panel in saying that if Brussels felt animal welfare was so important, it should also strengthen regulations governing indigenous hunters.

Animal welfare groups were meanwhile quick to hail Thursday's ruling.

"For the first time, the WTO has sent a clear message to governments around the world that moral values on the protection of animals are taken seriously in international trade law," Emily Rees from World Society for the Protection of Animals said in a statement.

The Brigitte Bardot Foundation called the decision "perfectly justified," stressing that "European citizens have the right to refuse to become accomplices in massacres that scandalise public opinion."

And the People for the Ethical Treatment of Animals (PETA) called the ruling "a victory for baby seals who are bludgeoned to death in front of other desperate seals, and brings us a giant step closer to the day when violence on Canadian ice floes is a thing of the past."