The World Trade Organization (WTO) has dealt a blow to European Union farm-subsidy policy by declaring that much of the 25-nation bloc's sugar exports were illegal.
Brussels had attempted to overturn last year's finding by a panel of trade judges that several million tonnes of surplus EU sugar output, or "C" sugar, which should be exported without subsidies, was in fact benefiting from state aid.
In rejecting the EU appeal, the WTO's Appellate Body, its top court, also upheld a ruling that Brussels, which imports sugar from poor developing countries at inflated prices, could not export a similar amount at reduced prices on the world market to recover some of the cost.
Australian Trade Minister Mark Vaile, whose country, along with Brazil and Thailand, brought the case against Brussels, said the decision would boost Australian exporters.
"This will result in better conditions for Australia's sugar industry, which depends on the world market for around 80 per cent of its income," Mr Vaile said in a statement.
The European Union had been bracing for defeat. It said it was disappointed but would obey.