Pre-2001 from what I've read that is how Echelon worked. The UK would spy on Americans, Americans would spy on the UK, and they would both exchange intelligence to bypass each one's respective laws.

But following 9/11 there would be no way the UK could keep up with the US's new intelligence quantity/demands, so the US started spying on themselves and new laws had to quickly get penned to make that retrospectively legal.