Champagne time for wine industry as US and Europe avert trade war

The deal will allow Americans to drink many wines that trade under the names of Europe's most famous wine-growing regions, but no new brands of American "chablis" or "burgundy" will come on to the market. This avoids the danger of disruption to €2bn worth (£1.35bn) of trade across the Atlantic.

For years Europeans have fought to protect the names of its most famous drinks and to preserve the reputation of its finest vineyards.

Terms such as champagne, hock and moselle already have protection within the 25-nation bloc and a host of countries with which the EU has trade arrangements. For example, a trade deal with South Africa almost stalled on the issue of whether its port and sherry could be sold under those names.

But America has refused to give up its right to sell within the US wines labelled with the names of regions thousands of miles away and products such as Korbel American champagne are well established. Efforts in 1984 to resolve the problem produced only a temporary solution.

Under yesterday's deal, companies that have registered them will be able to continue to use the 17 European wine names - including champagne, chianti, claret, port and sherry - inside the US. But no one will be able to launch new products with these names.

Also covered is the thorny issue of whether the produce of large, mechanised plants in the US can be sold with labels bearing words such as "chateau", "clos", "sur lie", "vintage" or "crusted". Fourteen such "EU traditional expressions" will continue to be used by US wine producers for at least the next three years while Brussels tries to negotiate agreement on phasing them out.

Eventually the EU hopes to persuade the Americans to axe terms such as champagne and make sure that wine with a "chateau" name is grown near something approaching one.

Meanwhile the US wineries will no longer need special dispensation to sell products produced using techniques banned in Europe, such as flavouring wine with oak chips (rather than ageing it in barrels).

The row over this issue had threatened to explode into a full-grown confrontation and court case at the World Trade Organisation, so yesterday's deal was welcomed by politicians on both sides of the Atlantic.

It has, however, divided wine producers and viticulturalists. Marion Wolfers, secretary general of the European Wine Industry Committee, said: "We would like to have gone further but this deal secures the trade , and ensures that we will not have to face excessive US administrative burdens on our wine. It recognises our system and it is not going to drag us into a trade conflict. It also limits the use of the 'semi-generic' terms".

COAG, a coalition of Spanish farming and agricultural organisations, issued a statement calling for the EU ministers to reject the deal. It argued that the agreement would mean "unfair competition against European wines", because of the advent of new wines made with techniques banned by the 25 nation states. This would set a damaging precedent for other nations negotiating deals with the EU.

The deal with the US is part of a wider campaign by the EU to protect Europe's most expensive and exclusive food and drinks.

In separate negotiations in the World Trade Organisation, Europe wants to seize back the exclusive right to product names such as parma ham and roquefort cheese, which have been appropriated around the globe.