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refer to them as the bilateral approach, the multilateral approach, and the international approach.

Let me start with the bilateral approach, under which regulators in

one country enter into bilateral arrangements as to accounting

harmonization with regulators in another country. An example of this

approach is the proposed bilateral disclosure system between Canada

and the United States pending at the SEC. 19/ The advantage of the

bilateral approach is that it may be faster and easier to implement than

a

multilateral

agreement

involving

many

countries'

regulators.

The

disadvantage is that, as more and more separate bilateral agreements

are entered into, requirements under one bilateral agreement may differ

from those under another bilateral agreement, thereby perpetuating

rather than reducing accounting disparities.

The second approach is cooperation on a regional basis ••-

multilateralism. The best example of this approach is in the European

Economic Community, which has taken a number of significant steps,

inclUding some involving accounting, to facilitate capital flows among its

member states. For example, the EEC has issued a directive on mutual

recognition of member states' prospectuses and related financial

19/ ~ 1990).

Securities Act Release No. 6879, 55 FR 45896 (October 31,

12

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