The Court of First Instance (CFI), the EU's second highest court based in Luxembourg, rejected the four elements of Austria's appeal and ordered it to pay costs.
Acting on behalf of Upper Austria, Vienna informed the European Commission in early 2003 of a draft law to outlaw all GMOs in that region for three years. It was the first attempt by an EU member state to create a legally approved GMO-free zone.
But the ban never entered force as it first needed approval from the Commission which polices the EU's single market.
Then, in September, the Commission ruled that there was no new scientific evidence to justify such a ban -- meaning it would be illegal for Upper Austria to impose one by putting its draft law into force. So Vienna then appealed to the CFI.
"The actions must be dismissed in their entirety," the CFI said in its ruling, obtained by Reuters.
Austria, whose government is known to be sceptical of GMO technology, has two months to appeal against the ruling.
Vienna has consistently rejected all new GMO approvals since December 2003 when the EU restarted GMO voting to try and break an unofficial biotech ban that finally ended in May 2004.
LEGAL GREY AREA
GMO-free zones are a legal grey area in the EU, where more than 70 percent of consumers do not want biotech foods, fearing the damage that GMO crops may cause to the environment and the potential risks that GMO foods pose for human health.
Their legal basis is unclear since EU law does allow several GMOs such as maize, rapeseed and carnation types to be grown anywhere in the bloc. These were approved before the EU began its five-year moratorium on new GMOs, lifted in May 2004. Upper Austria has been a test case for GMO-free zones in the European Union, whose member governments consistently fail to agree on allowing any new GMO products for import, or growing.
Since the European Commission rejected its request to become GMO-free, more than a hundred regions in countries from Britain to Italy and Greece have banded together in a loose-knit network to try and stop biotech crops being grown in their areas.
But they learnt from the Upper Austria example, using other provisions in EU laws regulating the environment and single market to make their case for a GMO-free zone.
"The movement against genetically modified crops will not be stopped by one legal ruling," said Helen Holder, GMO campaigner at Friends of the Earth Europe in a statement on Wednesday.
"Thousands of local governments and regions across Europe are voting to ban these unwanted and risky crops."