Why are other countries not allowed to use the word champagne for wine but the US can?

Real champagne can only be produced in one place in the world, the Champagne appelation in France. Although by international treay, nobody allows winemakers to label something as champagne, the U.S. compromised; it allows producers to label a wine as 'champagne' only under special circumstances. To quote the relevant legal literature - Title 26, section 5388(E)(51)(F)(III):

(c) Use of semi-generic designations

(1) In general: Semi-generic designations may be used to designate wines of an origin other than that indicated by such name only if -

• (A) there appears in direct conjunction therewith an appropriate appellation of origin disclosing the true place of origin of the wine, and
• (B) the wine so designated conforms to the standard of identity, if any, for such wine contained in the regulations under this section or, if there is no such standard, to the trade understanding of such class or type.

Because champagne is a semi-generic term under the accompanying second part of the regulation, if a wine (A) has a note of exactly where the wine was actually produced and (B) has all the properties of a champagne, then it is legally permitted to label it as such. The majority, however, do not label it so.

The area of Champagne in which Champagne can be produced and labeled as Champagne was recently enlarged significantly. This means that wine from a vineyard that could not produce Champagne on one day could the next day call the very same wine Champagne.

In blind taste tests, many consumers prefer sparkling wine produced elsewhere to that produced in Champagne.