Deal near completion after talks started in 2010.
The European Union (EU) and US are likely to sign an ‘umbrella agreement’ for personal data protection transferred during criminal matters.
The talks between the countries started back in 2010, with the deal looking to protect personal data transferred as part of transatlantic cooperation during criminal investigations.
Following the deal, citizens will have the right to access, rectify or delete personal data when it is processed with an objective to prevent, investigate, detect or prosecute criminal offences.
EU vice-president Viviane Reding said: "Protection of personal data is a fundamental right for EU citizens.
"To guarantee this right, we need to be ambitious in our approach to personal data protection – both at home and abroad.
"Today’s decision gives us the green light to negotiate a solid and coherent agreement with the United States which balances enforceable rights for individuals with the strong cooperation we need to prevent terrorism and organised crime. I look forward to meeting my US counterparts in Washington next week to kick start these important negotiations."
The deal will also protect personal data exchanged between police and judicial authorities and between companies and law enforcement agencies.
Presently, EU citizens residing outside the US cannot go to US courts and file a case if they think their data has been misused, but US citizens have the right to file a case in EU courts even from their own country.
This is reportedly one of the reasons why the deal could not materialise until now and, according to the EU, until "right to judicial redress" is enshrined in law, the deal cannot be signed.
Previously, National Security Agency contractor Edward Snowden revealed that the US has been spying on EU citizens, which affected the relations between the two nations, and the deal, is likely to help improve the relations between EU and US.
On 26 May 2010, the European Commission proposed a draft mandate for negotiating a personal data protection agreement between the two sides.