In a written decision, the WTO both supported and rejected an appeal from Canada against a 2010 ban that proved to be devastating for the country's seal hunt.
The WTO, while finding that the EU's so-called Seal Regime had violated international trade agreements, has determined that the ban was valid because of a controversial public morals clause.
Canada's seal industry had been expecting something of a split decision, based on details leaked last month.
The WTO panel zeroed in on exemptions in the 2010 ban that were intended to cover indigenous community and "hunts conducted for marine resource management purposes."
The panel found the exemptions violated the WTO's Technical Barriers to Trade Agreement in part because "these exceptions accord imported seal products treatment less favourable than that accorded to like domestic and other foreign products."
As well, the panel wrote, "such less favourable treatment does not stem exclusively from legitimate regulatory distinctions."
Despite those findings, the panel backed the ban against seal products, referring to the ongoing outrage that Canada's seal hunt triggers in Europe.
"The panel found however that the EU Seal Regime does not violate Article 2.2 of the [Technical Barriers to Trade] Agreement because it fulfils the objective of addressing EU public moral concerns on seal welfare to a certain extent, and no alternative measure was demonstrated to make an equivalent or greater contribution to the fulfilment of the objective," the panel wrote.
Some countries ban seal item imports
About 900,000 seals are hunted around the world each year, according to the European Commission. Countries that have commercial hunts include Canada, Norway, Greenland and Namibia.
The commercial seal hunt off Newfoundland last spring landed about 91,000 harp seals, up from 69,000 the year before but far short of the federal quota of 400,000.
Countries with bans on imported seal products include the U.S., Mexico, Russia and Taiwan.
An EU court last year upheld the EU embargo, saying it's valid because it fairly harmonizes the EU market while protecting the economic and social interests of Inuit communities.
Either side has 60 days to appeal Monday's findings from the WTO dispute panel.