Completion of the European Community's internal market will force important changes in the economies of member countries, and the effects of those changes will spill over into the rest of the world. Within the EC, the prevailing view has been steadfast in the expectation that the benefits of further integration will exceed the costs. This has been especially the case among European businessmen, who have been in the lead in this phase of economic integration.1 As the target date of I992 draws closer, however, the level of anxiety, especially about the costs of adjustment, appears to be rising in some sectors and some 2 countries. Attitudes in non-member countries, in both private and official circles, have varied. The initial response from the executive branch in the United States was favourable. There has, however, been considerable fear among U.S. business and labour leaders that completion of the internal market would be accompanied by a conversion of Europe into an economic 'fortress' with sharply reduced access to foreigners. In some European non-member countries - notably Austria and Sweden - the prevailing view favours membership. The insider-outside issue is still being debated in Switzerland and elsewhere and is likely to play a role in the trade strategies of a number of Eastern European countries. In North America, the United States has entered into a free trade agreement with Canada and is poised for negotiations with Mexico. Some have suggested that American interest in regional trading pacts has been motivated in part at least by a strategic desire to strengthen the United States' bargaining hand with the EC. While regionalism thus thrives, the trade talks of the Uruguay Round lie moribund. If completed as planned, the current process of economic integration in Europe will replace a group of national markets, segmented in various degrees by a proliferation of non-tariff barriers, with a single regional market. If plans for monetary integration also reach fruition, they will replace a system of multiple currency areas with a single regional currency domain. From the perspective of the outsider, there are three broad areas of concern about the external effects of the ongoing process of real and monetary integration in Europe. The first, which is discussed in Section II, deals with the implications of goods and resource market integration for outside industries and firms and for outside welfare generally. This includes the direct effects of internal liberalisation and the effects of possible changes in the level of