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FRIDAY, JULY 25, 1960
+OUR AIM, THEREFORE, IS TO USE AS MUCH OF THE QUOTAS AS WE CAN- AND TO USE THEM IN SUCH A WAY AS TO ENABLE HONG KONG AS A WHOLE TO OBTAIN AS MUCH BENEFIT, IN MONEY TERMS, AS POSSIBLE,✦ SAID MR TSAO.
*THIS PHILOSOPHY REQUIRES A FLEXIBLE AND PRAGMATIC
APPROACH. SO, IN DEVISING THE RULES OF THE SYSTEM WE TRY, AS FAR AS POSSIBLE, TO MAKE COMMERCIAL SENSE,+
HE ILLUSTRATED THE DANGERS OF ADOPTING A PURIST APPROACH AND MAKING RULES WHICH COULD STAND UP TO ANY CRITICISM.
TAKING QUOTA TRANSFERS AS AN EXAMPLE, MR TSAO SAID: +WE ALLOCATE QUOTAS TO COMPANIES WHICH HAVE A RECORD OF PERFORMANCE IN THE PAST. WE DO SO BECAUSE THESE ARE THE COMPANIES WHICH HAVE PROVEN ABILITY TO USE QUOTAS. SO, THE LOGICAL CONDITION ATTACHING TO SUCH ALLOCATION SHOULD BE THAT IF THEY DO NOT USE THEM, THEY LOSE THEM.
+GIVEN THAT CONDITION, IT WOULD BE ILLOGICAL TO ALLOW COMPANIES TO MAKE WHAT IN OUR JARGON IS KNOWN AS TEMPORARY TRANSFERS. IN EFFECT THIS MEANS THAT A COMPANY HOLDING THE QUOTA MAY PASS ON TO ANOTHER COMPANY THE RIGHT TO SHIP AGAINST THE FORMER'S QUOTA IN ONE YEAR, WITHOUT THE TRANSFERROR LOSING ITS RIGHT TO HIS QUOTA IN THE FOLLOWING YEAR, HE SAID.
MR TSAO SAID THAT, IN PURIST TERMS, HE WOULD AGREE THAT SUCH A SYSTEM DID NOT STAND UP TO LOGIC. BUT WHAT, HE ASKED, WOULD HAPPEN IF THE RULES SAID THAT ALL COMPANIES MUST USE THEIR QUOTAS EVERY YEAR AND, IF THEY DID NOT USE THEM, THEY WOULD LOSE THEM.
+ONE CONSEQUENCE WOULD BE THAT A COMPANY TRADING IN SHIRTS IN YEAR ONE, WOULD BE ALLOCATED SHIRT QUOTAS IN YEAR TWO WHEN RESTRAINT WAS FIRST IMPOSED. IN YEAR THREE HIS CUSTOMER NO LONGER WANTED SHIRTS BUT INSTEAD REQUIRED TROUSERS. HE CANNOT SHIP TROUSERS, BECAUSE HE HASN'T THE QUOTA. HE CANNOT USE HIS SHIRT QUOTA, BECAUSE HE HASN'T GOT THE ORDER.
+AND THEN THERE IS COMPANY B WHICH IS IN THE OPPOSITE POSITION HAVING GOT TROUSERS QUOTA, BUT HAS ONLY GOT SHIRT ORDERS. IF QUOTAS CANNOT BE TRANSFERRED, THEY ARE BOTH GOING TO LOSE THEIR RESPECTIVE ALLOCATIONS IN YEAR FOUR, HE SAID.
+ IF SUCH A LOSS WERE LIMITED TO THE COMPANIES CONCERNED, THE GOVERNMENT NEED NOT INTERVENE. HOWEVER THE MATTER DOES NOT REST WITH THE COMPANIES, BY DEFINITION, UNUSED QUOTA RESULTS IN UNUSED TRADING OPPORTUNITIES FOR HONG KONG.
+IN THIS VERY COMPLEX WORLD OF COMMERCE, THE PATTERN IS NOT LIKELY TO BE LIMITED TO TWO COMPANIES TRADING IN TWO PRODUCTS,+ SAID MR TSAO.
+THE ACTUAL SITUATION OFTEN INVOLVED A VERY LARGE NUMBER OF COMPANIES, TRADING IN A VERY LARGE NUMBER OF ITEMS, AND THE AMOUNT OF QUOTAS THAT COULD BE LOCKED INTO COMPANIES THAT ARE UNABLE TO USE THEM IF THEY WERE NOT ALLOWED TO EXCHANGE THEM, COULD BE A VERY LARGE AMOUNT INDEED.
/4'SOME WOULD