Representatives for the bloc's 27 nations endorsed, with a few changes, a European Commission proposal aiming at allowing broader use of plants obtained by so-called new genomic techniques (NGTs).
"The proposal aims to boost innovation and sustainability within the agrifood sector, while contributing to food security and reducing external dependencies," the European Council said in a statement.
The council will now have to negotiate the final text with the European Parliament, with labelling and patenting expected to be among the most contentious issues.
Plans to relax the current rules on genetically modified organisms (GMO) were first put forward by the commission in 2023.
Proponents say some NGTs only speed up genetic modifications that could have come about naturally or through traditional cross-breeding procedures -- thus warranting looser regulation.
The commission argued NGTs could help grow crops that require fewer pesticides, are better adapted to climate change and need less water.
The idea was broadly backed last year by the EU parliament, which voted in favour of the creation of two categories of NGT plants.
NGT 1 plants -- considered to be equivalent to their naturally occurring varieties -- would be freed from authorisations, labelling and monitoring rules for GMOs.
All other NGT plants would fall into the NGT 2 category, which would mostly remain under the GMO restrictions.
- Thorny debate -
On Friday member states agreed on the substance of the proposal, with a few amendments.
These include allowing member states to ban cultivation of NGT 2 on their territory and creating an "expert group" on the effect of patents on NGT plants.
The proposal was passed with a narrow majority, according to diplomats.
It was decried by environmental groups, which have said deregulation favours big corporations and ignores potential dangers to the environment.
"EU governments have voted on the side of a handful of big corporations' profits, instead of protecting farmers and consumers' right to transparency and safety," said Mute Schimpf of Friends of the Earth Europe.
"They have slashed regulatory oversight to zero and eliminated liability for untested new GMOs, gambling on empty promises for plants that don't even exist yet."
But Pan-European farmers' group Copa-Cogeca hailed the decision.
It "could revitalise European seed production and offer new opportunities to farmers and cooperatives by providing access to crop varieties that are more resistant to droughts and diseases, while improving yields and reducing input use," the group said.
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