US officials on Friday slammed plans to construct an EU-centric communication system, designed to prevent emails and phone calls from being swept up by the NSA, warning that such a move is a violation of trade laws.

Calling Europe’s proposal to build its own integrated communication system “draconian,” the office of the US Trade Representative (USTR) said American tech companies, which are worth an estimated $8 trillion per year, would take a financial hit if Brussels gives the initiative the green light.



"Recent proposals from countries within the European Union to create a Europe-only electronic network (dubbed a 'Schengen cloud' by advocates) or to create national-only electronic networks could potentially lead to effective exclusion or discrimination against foreign service suppliers that are directly offering network services, or dependent on them," the USTR said in its annual report.



In the aftermath of Edward Snowden’s whistleblowing activities at the National Security Agency, which proved that much of the world’s telecommunication meta-data is being stored away in the United States, European countries – notably Germany and France - are desperate to get a handle on their own networks without relying on a meddlesome middleman.



Germany’s outrage over the revelations hit full stride last month when Der Spiegel, the popular daily newspaper, asked if it is “time for the country to open a formal espionage investigation” following yet more disclosures that Britain's GCHQ infiltrated German internet companies and the NSA collected information about (German Chancellor Angela) “Merkel in a special database.”



Now, US trade officials are up in arms over proposals by Germany's Deutsche Telekom (in which the German government owns less than 30 percent), to avoid passing communications to the United States, saying the move would give European companies an unfair advantage over their US colleagues.



"Any mandatory intra-EU routing may raise questions with respect to compliance with the EU's trade obligations with respect to internet-enabled services," the USTR said. "Accordingly, USTR will be carefully monitoring the development of any such proposals."



If the European-centric plan gets the go ahead, it would require the dismantlement of the Safe Harbor agreement that allows US companies access to European data. It should be noted that despite the work of the NSA, Europe has some of the strictest privacy laws in the world.



US telecommunication and internet firms are now lobbying Washington to calm fears over privacy concerns in an effort to halt Europe’s move toward protectionism.

Similar criticisms were directed by the USTR at another American ally, Canada. The representative complained about privacy rules enforced in Canadian provinces of British Columbia and Nova Scotia, which do not normally allow public bodies to store and access private data of Canadians outside the country.

The USTR also criticized the Canadian federal government’s move to build a unified email system, which required data to be stored in Canada and thus prevented US companies from bidding. Bell Canada eventually won the $400-million contract.

“In today’s information-based economy, particularly where a broad range of services are moving to “cloud” based delivery where US firms are market leaders, this law hinders US exports of a wide array of products and services,” the report said.

Much like the EU, Canada has concerns over its dependence on US for routing telecommunications, with some 90 percent of all Canadian internet traffic going through the US. The Canadian Internet Registration Authority proposed in October 2013 building up domestic infrastructure, which would change this and protect the data from potential NSA snooping.