The country's winemakers will have the right to export the drink under the label for ten years, after which they will be restricted to the domestic market, Italian news agency Ansa reported.
Prosecco has since 2009 had a geographical designation label (DOC), meaning any wine carrying the label must be produced in one of two Italian regions, Veneto or Friuli-Venezia Giulia.
Italy has in the past been fiercely protective of the Prosecco designation, launching a 2023 ad campaign warning Londoners against cheap imitation drinks and blocking Croatia's attempts to register the Prošek name with the EU.
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While the agreement might sound like a win for Australia's winemakers, in reality it involves making a compromise, according to Australian economist Hazel Moir.
Australia already uses the Prosecco label for sparkling wine made with the prosecco grape variety, both for domestic sales and exports (though not to the EU).
A 2013 attempt by the European Union to trademark the name based on its geographical indication was blocked by the Winemakers' Federation of Australia.
Under the terms of the deal, Australia accepts the restriction, requiring it to phase out its use of the name for exports over the next ten years.
"This is a clear loss: it recognises our sovereignty at home, while sacrificing a valuable naming right abroad," Moir writes.
Still, Lee McLean from the producers' association Australian Grape and Wine told ABC that the agreement represented a long-term victory, as it's expected to save the industry an estimated €8.7 million per year in scrapped EU tariffs on wine exports.
"Europe remains Australia's largest export region by volume. In 2025 alone, 245 Australian wine exporters shipped 76 million litres of wine valued at $143 million [€85.5 million] to EU member markets," he told the outlet.
Italian winemakers appeared similarly content with the deal, with Giancarlo Guidolin, president of the Consortium for the Protection of Prosecco DOC, calling it "a significant step, strengthening Europe's position in a global context where such names are often considered generic."
Australia is the first country to reach such an accord with the EU, the culmination of eight years of negotiations.
The deal is expected to boost European exports by up to 33 percent over the next ten years.
It comes two months after the bloc signed a landmark trade agreement with India following almost two decades of talks.
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