Many consumers are turning from beers and spirits to wine

Under the agreement, US producers will limit the use of names such as chianti, burgundy and champagne, and will eventually phase them out altogether.

In return, the EU will relax its rules regulating wine imports from the US.

The accord was greeted with optimism by wine producers in France and California who said it would help boost exports on both sides of the Atlantic.

Corking charge

European winemakers have been keen to protect their image, brand-names and traditional production methods amid increasing competition from rivals in the US, South American, Australia and New Zealand.

However, the US had been unwilling to grant concessions until it was given freer access to European markets.

Up until now US producers needed special permits to sell wines in Europe that had been produced using techniques banned by the EU such as flavouring the drink with oak chips.

The two sides had implemented short-term trade agreements to tide them over until they hammered out a more lasting deal during a meeting in Washington.

Potential sales growth made it worthwhile to find some common ground.

The US is expected to become the world's biggest wine consumer over the next couple of years.

France alone exports some 1.6bn euros (�1.1bn; $2bn) worth of wine to the US every year, according to the French Wine Exporters Federation.

For the US, Europe accounts for almost two-thirds of its exports.