Duality of N=2 Heterotic -- Type I Compactifications in Four Dimensions

We discuss type I -- heterotic duality in four-dimensional models obtained as a Coulomb phase of the six-dimensional U(16) orientifold model compactified on T^2 with arbitrary SU(16) Wilson lines. We show that Kahler potentials, gauge threshold corrections and the infinite tower of higher derivative F-terms agree in the limit that corresponds to weak coupling, large T^2 heterotic compactifications. On the type I side, all these quantities are completely determined by the spectrum of N=2 BPS states that originate from D=6 massless superstring modes.