EU legislators encouraged the European Commission to continue negotiations to strengthen a planned data transfer deal with the US, claiming that the agreement still had issues.

The action might cause a crucial agreement for thousands of businesses to be further delayed.

In a draft ruling from December, the EU executive claimed that US protections against American espionage activities were sufficient to allay EU worries about data privacy.

Due to these concerns, Europe's top court invalidated two prior data transfer agreements that affected thousands of businesses that transfer Europeans' personal data to the US for use in financial services, human resources, and e-commerce.

"This new proposal contains significant improvements, but unfortunately, we are not there yet," lawmaker Juan Fernando Lopez Aguilar said after the assembly voted in a non-binding resolution against the proposed pact.

He claimed that factors related to judicial independence, openness, access to justice, and remedies were still lacking.

Absent special authorization, such as through a contract, the commission must establish that a foreign jurisdiction has an acceptable level of protection similar to the General Data Protection Regulation before it can transmit data outside of Europe. The framework outlined European requirements, including one that President Joe Biden signed in October mandating the intelligence community to consider privacy impacts, before the United States could be recognized as providing acceptable protections.

Without a framework, the ability of US tech companies such as Facebook and Google to process European's data becomes harder, possibly impossible. Facebook in early 2022 said it would likely have to withdraw from the European market absent a trans-Atlantic data flow framework. A 2021 study commissioned by trade association Digital Europe concluded that a loss of cross-border data flows on exports from data-reliant sectors would lead to an annual reduction in EU gross domestic product of 330 billion euros.

"So, we call on the Commission to continue negotiations and properly address these concerns. The mechanism must genuinely protect the data of EU citizens and businesses," he said.