A proposed moratorium on genetically modified organisms, similar to a current Swiss initiative, has been rejected by the European Court of Justice (ECJ).
On Wednesday the ECJ threw out an application from the Austrian province of Upper Austria for a moratorium.
The Austrian province was hoping to achieve exactly the same goals as the Swiss campaign. They wanted a ban on the cultivation of genetically modified organisms (GMOs) in agriculture for several years.
Supporters want to protect conventional and biological farmers from potential contamination by genetically modified crops in neighbouring fields.
The Austrians argued that coexistence between genetically modified and natural agriculture is not possible.
But the ECJ said the province had not provided sufficient evidence that it had an "unusual or unique ecosystem". The Austrians had needed to prove this in order to receive an exemption from strict European Union regulations.
In principle it is permitted to cultivate genetically modified crops, which have been approved by Brussels, anywhere in the EU.
"This is a very strong signal to EU members that an EU-wide cultivation ban conflicts with Single European Market rules," explained the spokeswoman for Stavros Dimas, the EU Environment Commissioner.
The verdict is a defeat for some 160 regions in Europe that have declared themselves GM-free zones up to now. But they are not ready to throw in the towel.
"The movement against genetically modified seeds will not be stopped by one ruling," the environmental organisation Friends of the Earth said in Brussels.
In Austria, other provinces have already introduced strict precautionary regulations that make genetic farming almost impossible in practice.
However, the EU ruling pleased opponents of the GM-free initiative in Switzerland. A referendum on the issue will take place in Switzerland at the end of November.
Johannes Randegger, a parliamentarian from the centre-right Radical Party, said the EU had already scientifically proved that the coexistence of genetically modified and conventional farming is possible. "This ruling shows that moratoriums are superfluous," he said.
Maya Graf from the Green Party naturally saw it differently. "The European public is mostly against gene technology in food," she said. "They are denying us the possibility to decide on this question democratically."
swissinfo, Simon Thönen in Brussels
A people's initiative is calling for a five-year ban on the cultivation of genetically modified organisms (GMOs) in Swiss agriculture. A nationwide vote will take place on 27 November.
The province of Upper Austria was seeking a similar moratorium from the EU but the European Court of Justice refused the application for a ban.
Under current regulations GMOs can be used in agriculture anywhere in the EU.