government markets. In recent months, congressional activity in the US around the subject of job losses through outsourcing has intensified<sup>24</sup> . At the same time, in Europe, for example, legal norms designed to protect workers in outsourced deals, known as TUPE (Transfer of Undertakings and Protection of Employees) could also have an inhibiting effect on trade.<sup>25</sup> Another issue that could have a profound effect on electronic commerce is privacy. In late 1998, the European Union issued a wide-ranging directive that aims to safeguard the privacy of personal data of EU citizens and prevent its misuse worldwide. It is backed by the power to cut off data flows to countries that the EU judges not to have adequate data protection rules and enforcement. The directive caused frictions with the US, which accused the EU of trying to impose laws beyond its own frontiers. A compromise was reached under which the US agreed to set up arrangements for the processing by companies of personal data from the EU, but the issue has not been fully resolved. The issue could have an impact on developing country exports of data processing services and confronts them with a difficult choice. If they choose not to enact laws deemed adequate, they could be shut off from participation in this growing market. In the absence of such laws and cumbersomeness of legal systems, it might be difficult for private firms to emulate United States firms and credibly commit to meet the required high standards. If they do enact stringent laws, then, unless the laws can be made specific to trade with particular jurisdictions, the result could be an economy-wide increase in the costs of doing business.<sup>26</sup> In sum, the growing volume and scope of exportable services and the possibility of explicit and implicit protectionism towards outsourcing call for determined and innovative GATS negotiation strategies.

# **II.  THE INADEQUACY OF EXISTING INITIATIVES AND FRAMEWORKS**

The main achievement so far of the WTO E-commerce Work Program has been the decision on duty-free electronic commerce, whereby WTO Members have agreed to refrain from imposing customs duties on electronically delivered products. The renewal of this commitment is also an element of the draft Cancun Ministerial Text. It is ironic that considerable negotiation energy has been invested in prohibiting tariffs which no country imposes, do not seem feasible, and are at least a transparent instrument of protection. And little attention has been devoted to inferior and more feasible instruments of protection such as outright prohibitions of foreign supply and discriminatory internal regulation and taxation.

In any case, since the bulk of such commerce concerns services, the natural place for liberalizing commitments is under the WTO’s General Agreement on Trade in Services

> 24 House Small Business Committee hearing on June 18th 2003, _“The Globalization of White-collar Jobs: Can America Lose These Jobs and Still Prosper?”._ In August 2003, the General Accounting Office, acting on letters from members of Congress initiated an official study of the impact of outsourcing on the US economy, expected to be released in the spring of 2004, and on October 20<sup>th</sup> another hearing at the House Small Business Committee, entitled _“The Offshoring of High Skilled Jobs,”_ explored the trend of highskilled jobs being moved abroad. See KIRKEGAARD (2003) on looming US protectionism as a reaction to growing outsourcing.

> 25  Financial Times (5 February 2003).

> 26 For instance, if private sector estimates generated in the United States are to be believed, information sharing saves the customers of 90 financial institutions (accounting for 30 percent of industry revenues), $17 billion a year ($195 per average customer household) and 320 million hours annually (4 hours per average customer household) (Glassman, 2000).

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