Cottonseed oil is used as an ingredient in cakes, bread and other processed foods.

"These processed cottonseed oils are indistinguishable from conventional cottonseed oils and can therefore be considered as being substantially equivalent to conventional cottonseed oils," the Commission said in a statement.

The EU has not authorised the import, use or cultivation of any new GM organisms since 1997 when many member states demanded tougher rules on scientific testing and labelling of products which concerned consumers were branding "Frankenstein foods".

The United States has said the bloc's unofficial moratorium on new GMOs is an illegal trade barrier.

A Commission official explained that the cottonseed oils were not covered by the moratorium - which only affects actual GM organisms and not products derived from them - and would not need to carry explanatory labels.

But under new regulations, still being discussed by EU governments and the European Parliament, even derived products will have to be labelled as coming from GMOs.

This will require producers and shippers of agricultural produce to ensure goods can be traced back to their origin - an idea that U.S. farmers say will be prohibitively expensive.

Once the new rules are in place - possibly some time next year - the cotton oils will have to bear the "derived from GMOs" label.

The biotechnology industry is against the new rules but hope that at least once they are in place, EU governments will lift their ban on authorising new GM organisms.