  We consider a sigma model formulation of open string theory with boundary
fermions carrying Chan-Paton charges at the string ends. This formalism is
particularly suitable for studying world-volume potentials on D-branes. We
perform explicit two-loop sigma model computations of the potential T-dual to
the non-abelian Born-Infeld action. We also discuss the world-volume couplings
of NS fluxes which are responsible for Myers' dielectric effect.
