Several governments in the developed world have been pushing for multilateral agreements to ban trademark theft on consumer goods and medicines, and ban websites such as MegaUploads and PirateBay, which provide free film and music downloads.
But lawmakers say these agreements could give companies such as internet providers unprecedented access to subscribers' online activity, raising privacy concerns.
The Anti-Counterfeiting Trade Agreement (ACTA) – signed by 22 of the EU's 27 countries, the US and Japan among others but not ratified by any of them – is one of several, including the US-based draft copyright bills SOPA and PIPA, to fall foul of public opinion.
"ACTA measures to enforce Intellectual Property rights in the digital environment could threaten privacy and data protection if not properly implemented," European data protection supervisors Peter Hustinx and Giovanni Buttarelli said in a statement.
Measures "could involve the large-scale monitoring of users' behaviour and of their electronic communications," they warned, saying this would go "beyond what is allowed under EU law".
Moreover, many of the voluntary enforcement measures listed in the draft ACTA deal would entail a processing of personal data by internet service providers (ISPs), which goes beyond what is allowed under EU law, the EDPS states in an opinion. Telecom companies have also resisted such rules, saying their role is not to police the internet.
The European Data Protection Supervisor is one of several EU bodies that have raised doubts over ACTA.
ACTA's stated aim is to establish common sanctions for copyright breaches, but many countries have snubbed it. These include Russia and China, which host many file-sharing websites, and India and China, which rely on copyright exemptions for cheap medicines.
In Europe, lawmakers care more about ACTA's potential harm to the internet than to generic drugs for poor countries.
Supporters of the agreement, such as the European Commission, which has been leading the EU's negotiations with other global partners such as Japan and the US, insist ACTA would only punish copyright crimes on a commercial scale.
The EU has asked its top court in Luxembourg to decide if ACTA dents people's privacy. A ruling could take up to a year.
The European Parliament's 700-plus members are due to vote on ACTA on May 29, with many saying they plan to reject it.