A secret proposed multilateral anti-counterfeiting trade agreement (Acta) may conflict with European privacy legislation, says the European data protection supervisor (EDPS).
EDPS Peter Hustinx said he "regretted" that the European Commission had kept him in the dark about the content of Acta.
"Acta is an agreement which raises significant issues as regards individuals' fundamental rights, and in particular their right to privacy and data protection," he said in a statement.
Hustinx "viewed with concern" the fact that so little information was publicly available about current negotiations.
"From what has been reported about the content of Acta, I am concerned as regards a potential incompatibility between envisaged measures and data protection requirements," he said.
This applied particularly to the legal framework that would be put in place to fight piracy on the internet. He said this could include large scale monitoring of internet users and impose obligations on internet services providers (ISPs) to adopt "three strikes internet disconnection policies" - also referred to as "graduated response" schemes.
Trade representatives from the US, EU and Asia-Pacific countries have been negotiating Acta in secret for two years, and aim to conclude a deal by the end of the year. Acta aims to protect trade in intellectual property such as drugs, software, music and videos against illegal copying and counterfeiters. It has been driven largely by the US music and film industries.
Hustinx said intellectual property was important to society and had to be protected, but it should not be placed above individuals' fundamental rights to privacy and data protection.
"A right balance between protection of intellectual property rights and the right to privacy and data protection should be ensured," he said.
"It is particularly crucial that data protection requirements are taken into account from the very beginning of the negotiations so as not later on having to find alternative privacy compliant solutions."
Hustinx recommended negotiators look for less intrusive ways to fight piracy on the internet. The three strikes approach was unnecessary to enforce intellectual property rights, he said. He said targeted ad hoc monitoring was a possible alternative.
Hustinx wanted "appropriate safeguards" applied to all data transfers related to Acta, especially where it involved the international exchange of personal data between authorities and/or private organisations located in the signatory countries.
"Such safeguards should take the form of binding agreements between EU senders and third-country recipients," he said.
He called for a "public and transparent dialogue" on Acta to ensure that it complied with EU privacy and data protection law.
Meanwhile, UK business secretary Peter Mandelson has bowed to pressure to amend the Digital Economy Bill now going through parliament. Instead of cutting off persistent illegal file sharers from the internet under a three-strikes proposal, they will be subject to "temporary account suspension".
Jim Killock, spokesman for the Open Rights Group, which is fighting the legislation, said government plans to disconnect users had not changed.
"The government's response is just more spin, which should not surprise us, coming from Lord Mandelson's officials," he said.
"'Temporary account suspension' sounds boring and reasonable. But it is just spin. The fact is that families will not be able to connect to the internet. That sounds like disconnection to us."