Europe's efforts to protect the trademarks of famous food and drink products such as Beaujolais, Chianti, Stilton and Champagne may have failed.
Parmesan is one of the products involved in the case
The World Trade Organisation has found against the European Union in a dispute over products identified with famous regions, the Associated Press says.
The EU wants products to be rebranded unless they are made in the European towns from which they draw their names.
AP said the WTO had reached an interim verdict against the EU on the issue.
The EU said many of its member states' most famous products had been abused by non-EU producers trading off their identities.
It cited the example of Italian ham producers from Parma having to rebrand their product as "super ham" in Canada, because local producers had already trademarked the Parma ham name.
Other products the EU said have been affected include Cognac, Sherry, Grappa, Rioja and Roquefort.
The US and Australia claimed the EU was breaching WTO rules by not giving equal protection to similar high quality products identified with regions or cities outside the EU.
They said that immigrants from Europe had been producing food and drink in those regions for generations.
The WTO is due to give its final ruling in the case next year.
The interim verdict is not binding but gives a clear indication of the WTO's thinking on the issue.
If the final ruling goes against the EU, producers around the world can continue to use the specialist regional names for their products.
The WTO said it could not comment on the findings as they were only available to the parties in the case.
The EU drew up a list of 41 products whose trademarks it said were being abused and said it may add a further 600 products to the list.
"It is simply not acceptable that the EU cannot sell its genuine Italian Parma Ham in Canada because the trademark 'Parma Ham' is reserved for a ham produced in Canada," the EU's outgoing agriculture commissioner Franz Fischler has said.
Separately, incoming trade commissioner Peter Mandelson has vowed to fight for stronger growth and job creation across the EU.
Mr Mandelson said he was "raring to go" after the new European Commission was approved by the European Parliament on Thursday.