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.
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