The World Trade Organisation'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 in November issued a similar ruling.
"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 today.
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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.
Like the disputes settlement panel, it 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.
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.
The EU has mustered what it says is convincing scientific evidence to prove that such methods are cruel.
Norway and Canada have deployed counter-arguments from scientists to try to knock down EU claims, insisting that seal hunting is no worse than commercial deer-hunting, which is widespread in the EU.