Skip to main content

Constructing the International Foundations of E-Commerce—The EU-U.S. Safe Harbor Arrangement

  • Henry Farrell

Much recent international relations scholarship has argued that states are unable to control e-commerce, so that private actors are coming to play a dominant role. However, this body of literature fails to account for emerging “hybrid institutions,” in which states create general frameworks of rules, which are then implemented by private actors. This article examines a prominent example of such an institution, the EU-U.S. Safe Harbor arrangement in the field of privacy, and sets out an alternative explanation of state–private actor relations in the sphere of e-commerce. It shows how Safe Harbor had its origins in efforts by the European Union (EU) and United States to mitigate problems of interdependence that threatened to undermine the principles of order on which their regulatory systems were based. Safe Harbor reflects neither the EU nor U.S. approach, but rather a novel blend of state and private regulation. The article demonstrates the vital role of argument and persuasion in identifying Safe Harbor as a solution, and in negotiating its particulars. It finds that conventional game-theoretic accounts of bargaining are unable to explain the negotiation of Safe Harbor, and argues that constructivist approaches should pay more attention to how argument can disclose new possibilities of action.

Hide All
Aaron, David L. 1999. Remarks of David L. Aaron, Undersecretary of Commerce for International Trade, at the 4th Annual IT Policy Summit of the Information Technology Association of America, March, Washington, D.C.
Beier, David. 1999. Opening Remarks. Presented at the Conference on the Digital Economy in International Perspective: Common Construction or Regional Rivalry? 27 May, Washington, D.C. Available at ⟨⟩.
Bennett, Colin J. 1992. Regulating Privacy: Data Protection and Public Policy in Europe and the United States. Ithaca, N.Y.: Cornell University Press.
Bennett, Colin J. 1997. Convergence Revisited: Toward a Global Public Policy for the Protection of Personal Data? In Technology and Privacy: The New Landscape, edited by Agre, Philip E. and Rotenberg, Marc, 99123. Cambridge, Mass.: MIT Press.
Berger, Suzanne. 2000. Globalization and Politics. Annual Review of Political Science 3:4362.
Binmore, Ken. 1990. Essays on the Foundation of Game Theory. Cambridge, Mass.: Basil Blackwell.
Binmore, Ken. 1993. De-Bayesing Game Theory. In Frontiers of Game Theory, edited by Binmore, Ken, Kriman, Alan, and Tani, Piero, 321–39. Cambridge, Mass.: MIT Press.
Börzel, Tanja A., and Risse, Thomas. 2000. When Europe Hits Home: Europeanization and Domestic Change. European Integration Online Papers 4(15). Available at ⟨⟩.
Cavoukian, Ann, and Crompton, Malcolm. 2000. Web Seals: A Review of Online Privacy Programs. Ontario: Office of the Information and Privacy Commissioner, and Canberra: Office of the Federal Privacy Commissioner of Australia.
Checkel, Jeffrey T. 2001. Why Comply? Social Learning and European Identity Change. International Organization 55 (3):553–88.
Checkel, Jeffrey T., and Moravcsik, Andrew. 2001. A Constructivist Research Program in EU Studies? European Union Politics 2 (2):219–49.
Cowles, Maria Green. 2001. Who Writes the Rules of E-Commerce? A Case-Study of the Global Business Dialogue on E-Commerce. AICGS Policy Paper 14. Baltimore, Md.: American Institute for Contemporary German Studies, Johns Hopkins University.
Cutler, A. Claire. 2000. Patterns of Public-Private Interaction at the International Level: Global Governance and the Modern Lex Mercatoria. Paper presented at the Conference on Common Goods and Governance Across Multiple Arenas, Max Planck Project Group–Common Goods: Law, Politics, Economics, June–July, Bonn, Germany.
Dessler, David. 1989. What's at Stake in the Agent-Structure Debate? International Organization 43 (3):441–73.
Drake, William J., and Nicolaïdis, Kalypso. 1999. Global Electronic Commerce and the General Agreement on Trade in Services: The Millenium Round and Beyond. In GATS 2000: New Directions in Services Trade Liberalization, edited by Sauvé, Pierre and Stern, Robert M., 399437. Washington, D.C.: Brookings Institution Press.
Drezner, Daniel W. Forthcoming. The Global Governance of the Internet: Bringing the Great Powers Back In. Political Science Quarterly.
Dryden, John. 2000. The Work of the OECD on Electronic Commerce. Available at ⟨⟩.
Egan, Michelle P. 2001. Constructing an European Market: Standards, Regulation and Governance. Oxford: Oxford University Press.
European Union/United States. 1997. Joint Statement on Electronic Commerce. Available at ⟨⟩.
Farrell, Henry. 2002. Negotiating Privacy Across Arenas: The EU-US ‘Safe Harbor’ Discussions. In Common Goods: Reinventing European and International Governance, edited by Héritier, Adrienne, 105–26. Lanham, Md.: Rowman and Littlefield.
Farrell, Henry. Forthcoming. Hybrid Institutions and the Law: Interface Solutions or Outlaw Arrangements? Zeitschrift für Rechtssoziologie.
Farrell, Henry, and Knight, Jack. Forthcoming. Trust, Institutions and Institutional Evolution: Industrial Districts and the Social Capital Hypothesis. Politics and Society.
Fearon, James D. 1998. Bargaining, Enforcement, and International Cooperation. International Organization 52 (2):269305.
Finnemore, Martha, and Sikkink, Kathryn. 1998. International Norm Dynamics and Political Change. International Organization 52 (4):887917.
Fligstein, Neil. 2000. Social Skill and the Theory of Fields. Unpublished manuscript, University of California, Berkeley.
Flynn, Gregory, and Farrell, Henry. 1999. Piecing Together the Democratic Peace: The CSCE and the “Construction” of Security in Post–Cold War Europe. International Organization 53 (3):505–35.
Froomkin, A. Michael. 1997. The Internet as a Source of Regulatory Arbitrage. In Borders in Cyberspace: Information Policy and the Global Information Infrastructure, edited by Kahin, Brian and Nesson, Charles, 129–63. Cambridge, Mass.: MIT Press.
Froomkin, A. Michael. 2000a. The Death of Privacy? Stanford Law Review 52 (5):1461–543.
Froomkin, A. Michael. 2000b. Wrong Turn in Cyberspace: Using ICANN to Route Around the APA and the Constitution. Duke Law Journal 50 (1): 17184.
Garrett, Geoffrey, and Weingast, Barry R.. 1993. Ideas, Interests, and Institutions: Constructing the European Union's Internal Market. In Ideas and Foreign Policy, edited by Goldstein, Judith and Keohane, Robert O., 173206. Ithaca, N.Y.: Cornell University Press.
Geanakoplos, John. 1992. Common Knowledge. Journal of Economic Perspectives 6 (4):5382.
Goldsmith, Jack L. 2000. Unilateral Regulation of the Internet: A Modest Defence. European Journal of International Law 11 (1):135–48.
Goldsmith, Jack L., and Posner, Eric A.. Forthcoming. Moral and Legal Rhetoric in International Relations: A Rational Choice Perspective. Journal of Legal Studies.
Grieco, Joseph M. 1990. Cooperation Among Nations: Europe, America, and Non-Tariff Barriers to Trade. Ithaca, N.Y.: Cornell University Press.
Harsanyi, John C. 1986. Advances in Understanding Rational Behavior. In Rational Choice, edited by Elster, Jon, 82107. New York: New York University Press.
Heisenberg, Dorothee, and Fandel, Marie-Helène. 2002. Projecting EU Regimes Abroad: The EU Data Protection Regime as Global Standard. Paper presented at the 98th Meeting of the American Political Science Association, August–September, Boston.
Hurley, Deborah, and Mayer-Schönberger, Viktor. 2000. Information Policy and Governance. In Governance in a Globalizing World, edited by Nye, Joseph S. Jr. and Donahue, John D., 135151. Washington, D.C.: Brookings Institution Press.
Johnson, David R., and Post, David. 1996. Law and Borders: The Rise of Law in Cyberspace. Stanford Law Review 48 (5):1367–402.
Johnson, James. 1997. Symbol and Strategy in Comparative Political Analysis. APSA-CP: Newsletter of the APSA Organized Section in Comparative Politics 8 (2):69.
Johnson, James. 2002. How Conceptual Problems Migrate: Rational Choice, Interpretation, and the Hazards of Pluralism. Annual Review of Political Science 5:223–48.
Katzenstein, Peter J., Keohane, Robert O., and Krasner, Stephen D.. 1998. International Organization and the Study of World Politics. International Organization 52 (4):645–86.
Keohane, Robert O. 1984. After Hegemony: Cooperation and Discord in the World Political Economy. Princeton, N.J.: Princeton University Press.
Keohane, Robert O., and Nye, Joseph S. Jr. 2000. Power and Interdependence. 3d ed. New York: Longman.
Knill, Christoph, and Lehmkuhl, Dirk. 2002. Private Actors and State: Internationalization and Changing Patterns of Governance. Governance 15 (1):4163.
Kobrin, Stephen J. 1997. The Architecture of Globalization: State Sovereignty in a Networked Global Economy. In Governments, Globalization, and International Business, edited by Dunning, John H., 146–71. Oxford: Oxford University Press.
Kobrin, Stephen J. 2002. Safe Harbors Are Hard to Find: The Transatlantic Data Privacy Dispute, Territorial Jurisdiction and Global Governance. Unpublished manuscript, Wharton Business School, University of Pennsylvania, Philadelphia.
Kobrin, Stephen J. Forthcoming. Economic Governance in an Electronically Networked Global Economy. In The Emergence of Private Authority: Forms of Private Authority and Their Implications for Global Governance, edited by Hall, Rodney Bruce and Biersteker, Thomas J.. Cambridge: Cambridge University Press.
Krasner, Stephen D. 1991. Global Communications and National Power: Life on the Pareto Frontier. World Politics 43 (3):336–66.
Krasner, Stephen D. 2001. Globalization, Power and Authority. Paper presented at the 97th Annual Meeting of the American Political Science Association, August–September, San Francisco, Calif.
Kratochwil, Friedrich V., and Ruggie, John Gerard. 1986. International Organization: A State of the Art on an Art of the State. International Organization 40 (4):753–75.
Long, William, and Quek, Pang. Forthcoming. Personal Data Privacy Protection in the Age of Globalization: The EU-U.S. Safe Harbor Compromise. Journal of European Public Policy.
Mann, Catherine L., Eckert, Sue E., and Knight, Sarah Cleeland. 2000. Global Electronic Commerce: A Policy Primer. Washington, D.C.: Institute for International Economics.
Mattli, Walter. 2001a. Private Justice in a Global Economy: From Litigation to Arbitration. International Organization 55 (4):919–47.
Mattli, Walter. 2001b. The Politics and Economics of International Institutional Standards Setting: An Introduction. Journal of European Public Policy 8 (3):328–44.
Mayer-Schönberger, Viktor. 1997. Generational Development of Data Protection in Europe. In Technology and Privacy: The New Landscape, edited by Agre, Philip E. and Rotenberg, Marc, 219–41. Cambridge, Mass.: MIT Press.
Morrow, James D. 1994. Modeling the Forms of International Cooperation: Distribution Versus Information. International Organization 48 (3):387423.
Newman, Abraham, and Bach, David. 2001. In the Shadow of the State: Self-Regulatory Trajectories in a Digital Age. Paper presented at the 97th Annual Meeting of the American Political Science Association, August–September, San Francisco, Calif.
Newman, Abraham, and Bach, David. 2002. The Transnationalization of Regulation. Paper presented at the 13th International Conference of Europeanists, March, Chicago.
Payne, Rodger A. 2001. Persuasion, Frames and Norm Construction. European Journal of International Relations 7 (1):3761.
Regan, Priscilla M. 1999. American Business and the European Data Protection Directive: Lobbying Strategies and Tactics. In Visions of Privacy: Policy Choices for the Digital Age, edited by Bennett, Colin J. and Grant, Rebecca, 199216. Toronto: University of Toronto Press.
Risse, Thomas. 2000. ‘Let's Argue!’: Communicative Action in World Politics. International Organization 54 (1):141.
Rubinstein, Ariel. 1991. Comments on the Interpretation of Game Theory. Econometrica 59 (4):909–24.
Scharpf, Fritz. 1994. Community and Autonomy. Multi-Level Policy Making in the European Union. Journal of European Public Policy 1 (2):13501763.
Schelling, Thomas C. 1960. The Strategy of Conflict. Cambridge, Mass.: Harvard University Press.
Schimmelfennig, Frank. 2001. The Community Trap: Liberal Norms, Rhetorical Action, and the Eastern Enlargement of the European Union. International Organization 55 (1):4780.
Scott, Susan. 1998. Overall Comments on the Safe Harbor Program. Available at ⟨⟩.
Shaffer, Gregory. 2000. Globalization and Social Protection: The Impact of EU and International Rules in the Ratcheting Up of U.S. Privacy Standards. Yale Journal of International Law 25 (1):188.
Shaffer, Gregory. Forthcoming. Managing U.S.-EU Trade Relations through Mutual Recognition and Safe Harbor Agreements: “New” and “Global” Approaches to Transatlantic Economic Governance? Columbia Journal of European Law.
Simon, Leslie David. 2000. NetPolicy.Com: Public Agenda for a Digital World. Washington, D.C.: Woodrow Wilson Center Press.
Spar, Debora L. 1999. Lost in (Cyber)space: The Private Rules of Online Commerce. In Private Authority and International Affairs, edited by Cutler, A. Claire, Haufler, Virginia, and Porter, Tony, 3151. Albany: State University of New York Press.
Spar, Debora L. 2001. Ruling the Waves: Cycles of Discovery, Chaos, and Wealth from the Compass to the Internet. New York: Harcourt and Brace.
Stone-Sweet, Alec. 1999. Islands of Transnational Governance. Unpublished manuscript, Nuffield College, Oxford University.
Streeck, Wolfgang, and Schmitter, Philippe C.. 1985. Community, Market, State–and Associations? The Prospective Contribution of Interest Governance to Social Order, in Private Interest Government: Beyond Market and State, edited by Streeck, Wolfgang and Schmitter, Philippe C., 129. Beverly Hills, Calif.: Sage Publications.
Swire, Peter P., and Litan, Robert E.. 1998. None of Your Business: World Data Flows, Electronic Commerce, and the European Privacy Directive. Washington, D.C.: Brookings Institution Press.
White House. 1997. A Framework for Global Electronic Commerce. Available at ⟨⟩.
White House. 2000. Fact Sheet: Data Privacy Accord with EU (Safe Harbor). Washington, D.C.: Office of the Press Secretary, White House. Available at ⟨⟩.
Young, Oran R. 1991. Political Leadership and Regime Formation: On the Development of Institutions in International Society. International Organization 45 (3):281308.
Zysman, John, and Weber, Steven. 2001. Governance and Politics of the Internet Economy–Historical Transformation or Ordinary Politics with a New Vocabulary? Available at ⟨⟩.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

International Organization
  • ISSN: 0020-8183
  • EISSN: 1531-5088
  • URL: /core/journals/international-organization
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed