322 Federal Review [VOLUME 19 COURT OF JUSTICE … · remains. of course. with the author. See M...

322 Federal Law Review [VOLUME 19

SECTION 92 OF THE CONSTITUTION AND THE EUROPEANCOURT OF JUSTICE

CHRISTOPHER STAKER·

1 INTRODUCTION

Section 92 of the Australian Constitution contains a terse statement that"trade, commerce, and intercourse among the States ... shall be absolutely free".The High Court's troubled search since Federation to give that statement a clearand certain interpretation is well known and requires no reiteration here.! MichaelCoper has identified 32 different phases in the history of the interpretation ofs 92 between 1909 and 1980.2 When the latest phase was ushered in with theHigh Court's 1988 decision in Cole v Whitfield,3 it was accompanied bypredictions by some commentators that it would be the last Professor Lane, forinstance, said that "The decision descended as a deus ex machina, providing anuncomplicated solution for those who write and advise on the kind of freedom ofinterstate trade and commerce that is now guaranteed by s 92 of theConstitution".4 The more pessimistic might wonder whether the Cole vWhitfield interpretation will in fact prove more durable than any of itspredecessors. Certainly, the subsequent s 92 decisions of the High Court, Bath vAlston Holdings Pty LidS and Castlemaine Tooheys Ltd v South Australia6

show that the formulation adopted by the Court in Cole v Whitfield cannot berelied upon to produce a clear result from its automatic application to any fact

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BA, LLB (Hons) (Adelaide), Attorney-Genera!'s Department, Canberra (on leave as aMenzies Scholar in Law. Oxford University). The views expressed in this article arethe personal views of the author and not necessarily those of any CommonwealthDepartment. authority or officer. The author gratefully acknowledges the comments ofProfessor Bernard Rudden and Mr Derrick Wyatt of Oxford University. ProfessorLeslie Zines and Mr Joshua Getzler. Responsibility for any errors or omissionsremains. of course. with the author.See M Coper, Freedom of Interstate Trade under the Australian Constitution (1983)and the literature cited at 371-380; L Zines. The High Court and the Constitution(2nd ed 1987) Chs 6-8; P H Lane, Lane's Commentary on the AustralianConstitution (1986) 501-543; C Howard. Australian Federal Constitutional Law (3rded 1985) Ch 5; M J Detmold, The Australian Commonwealth: A FundamentalAnalysis of its Constitution (1985) Ch 3.M Coper. supra n 1. Chs 2-33. The first s 92 case was Fox v Robbins (1909) 8 CLR115. The last case considered in Coper's study was Bernard & Co Pty Ltd v Langley(1980) 32 ALR 57.(1988) 165 CLR 360. 78 ALR 42. 62 AUR 303. (Subsequent page references are tothe CLR report.)P H Lane, "The Present Test for Invalidity under Section 92 of the Constitution"(1988) 62 AU 604. 614.(1988) 165 CLR 411. 78 ALR 669. 62 AUR 363. (Subsequent page references are tothe CLR report.)(1990) 169 CLR 436. 90 ALR 371. 64 AUR 145. (Hereafter "Castlemaine Tooheystf)(subsequent page references are to the CLR report.)

1990] Section 92 of the Constitution and The European Court ofJustice 323

situation.. If the Cole v Whitfield test is to be with us permanently, it will stillrequire development and refmement in subsequent case Iaw.7

Given the difficulties which have always surrounded the interpretation of s 92,and the inherent difficulty of giving concrete application to such abstract notionsas "free trade", comparative studies of provisions similar to s 92 in jurisdictionsoutside Australia are bound to be of assistance in any consideration of how theinterpretation of s 92 may further develop.. Thus, although the Court said inCole v Whitfield that decisions of the United States Supreme Court interpretingthe "commerce clause" in the United States Constitution did not provide "anyassistance in the elucidation of the meaning of s 92",8 a number of these caseswere referred to in Castlemaine Tooheys.9 In the latter case, Their Honours said:"Although the American cases cannot be treated as an accurate guide to theinterpretation of s 92, they identify in a useful way considerations which may berelevant in the process of characterization which an Australian court is calledupon to undertake."10 The purpose of this article is to compare the presentinterpretation of s 92 with the approach adopted in yet another jwisdiction, theEuropean Economic Community ("EEC"). Although the legal system of theEEC would appear to have less in common with the Australian Constitutionthan does that of the United States, it will be demonstrated that the Europeanexperience also identifies in a useful way considerations which are relevant in theAustralian context

This article is confined to the issue of State laws and measures adverselyaffecting trade in goods imported from other States. It was this issue which arosein Cole v Whitfield, Bath v Alston Holdings and Castlemaine Tooheys. Therelevant provisions of the EEC Treaty dealing with the free movement of goodsare set out in Part 2, followed by a description of how these provisions havebeen applied in practice by the European Court of Justice in Part 3. The currentinterpretation of s 92 will be compared with the European practice in Part 4, andsome questions arising from this comparison will then be considered in Part 5.Some concluding remarks follow in Part 6.

2 THE PROVISIONS OF THE EEC TREATY

It is not possible here to describe in any detail the structure and institutions ofthe EEC)l Unlike Australia, the EEe itself is not a separate state in

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Indeed. the High Court itself acknowledged that "Inevitably the adoption of a newprinciple of law. though facilitating the resolution of old problems. brings a newarray of questions in its wake": Cole v Whitfield, supra n 3. 408)Ibid 405.In the joint judgment of Mason CJ. Brennan. Deane. Dawson and Toohey II. supran 6. 468-471. 475.Ibid 471.There is abundant literature. On the structure and institutions of the EEC (that is. its"constitutional" and "administrative" law) see: T C Hartley. Th~ Foundations ofEuropean Community Law: An Introduction to the Constitutional and AdministrativeLaw of the European Community (2nd ed 1988); D A C Freestone andJ S Davidson. The Institutional Framework of the European Communities (1988);D Lasok and I W Bridge. Law and Institutions of the European Communities (4th ed1987). On the "economic" law of the EEe (including the law relating to the freemovement of goods) see especially D Wyatt and A Dashwood, The Substanlive Lawof the EEC (2nd ed 1981). and also I Steiner. Textbook on EEC Law (1988); D


international law, and unlike the Australian States, the member States of theEEC12 have their own intemationallegal personality. The EEC is established bythe Treaty of Rome (hereafter "the EEC Treaty")13 and various relatedinstruments. The provisions of the EEC Treaty form part of the national law ofeach member State.14 The organs of the EEC are the Council, the Commission,the European Parliament and the European Court of Justice (hereafter "ECJ"»)SSources of EEC law include the EEC Treaty and other constituent instrumentsthemselves, and EEC legislation which may be in the form of regulations,directives or decisions.l 6 The ECJ is the supreme authority in matters of EEClaw,17 and decides cases brought directly before it and questions referred to it bythe national courts of member States.l8

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Lasok, The Law of the Economy in the European Communities (1980). Acomprehensive treatment of all aspects of European Community law can be found inHalsbury's Laws of England (4th ed) Vols 51-52 (1986).Currently Belgium, Denmark, France, Gennany, Greece, Ireland, Italy, Luxembourg,the Netherlands, Portugal, Spain and the United Kingdom.Which was signed by the six original members in 1957. The text of the Treaty andrelated instruments can be found in B Rudden and D Wyatt (eds), Basic CommunityLaws (2nd ed 1986).In the United Kingdom, for instance, the European Communities Act 1972 has theeffect that "Any rights or obligations created by the Treaty are to be given legaleffect in England without more ado": H P Bulmer Ltd v J Bollinger SA [1914] 1 Ch401, 419 per Lord Denning MR. See also Stolce-on-Trent City Council vB&: Q pic[1990] 3 CMLR 31, 34 (United Kingdom, Chancery Division, per Hoffmann I): "TheTreaty of Rome is the supreme law of this country, taking precedence over Acts ofParliament."Some of these organs are common to the European Coal and Steel Community and theEuropean Atomic Energy Community ("Euratom")."Regulations" are of general application and are directly applicable in all memberStates. "Directives" impose on member States an obligation to achieve a particularresult in national law. "Decisions" are addressed to particular member States orindividuals, and are directly binding on the addressee. The EEC may also issue nonbinding "recommendations" and "opinions".The Court consists of a judge from each member State, a President and six AdvocatesGeneral. The Advocates General have no equivalent in the common law system. It isthe function of an Advocate General to give an impartial and reasoned opinion on acase in open court at the end of the oral proceedings in order to assist the Court inpreparing its judgment (EEC Treaty, Art 166). This opinion is not binding on theCourt, but it is influential, and is printed with the Court's judgment in the lawreports. See further, T C Hartley, supra nil, 52; Halsbury's Laws of England, supranil, Vol 51, 316-311. The Court's judgments are published in English by the Courtitself in an official series of reports, the European Court Reports (ECR), andunofficial reports, such as the Common Market Law Reports (CMLR), published bythe European Law Centre in London, and the European Community Cases (CEC),published by CCH. A useful casebook is B Rudden, Basic Community Cases (1987).The jurisdiction of the ECI is dealt with in Arts 169-188 of the EEC Treaty. It is notpossible to discuss the details of these provisions in this article. See T CHartley,supra nil, 56-59, 246-315; Halsbury's Laws of England, supra nil, Vol SI, Ch 2.The Commission (Art 169) or a member State (Art 170) which considers that anothermember State has failed to fulfil an obligation under the Treaty may bring the matterdirectly before the ECl. If the Court fmds that the member State has failed to fulfilthe obligation, the member State is required to take the necessary measures to complywith the Court's judgment (Art 171). Where a national court of a member Stateconsiders that a question of Community law is relevant to a matter before it, it may(or in some cases, must) request the ECl to give a preliminary ruling on that question

1990] Section 92 o/the Constitution and The European Court 0/Justice 325

Article 2 of the EEC Treaty states that the principal task of the EEC is topromote economic development by establishing a common market.19 Article 3provides that for this purpose, the activities of the EEC shall include:

(a) the elimination, as between Member States, of customs duties and ofquantitative restrictions on the import and export of goods, and of all othermeasures having equivalent effect; ...

(c) the abolition, as between Member States, of obstacles to freedom ofmovement for persons, services and capital; ...

While the Australian Constitution contains a brief statement in s 92 thatapplies not only to trade in goods, but also to trade in services20 and to the freemovement of persons,21 the "four freedoms" referred to in Art 3 of the EECTreaty (the free movement of goods, of persons, of services and of capital) are alldealt with in separate provisions of the EEC Treaty. "Free Movement of Goods"is in fact the title of an entire part of the Treaty (Arts 9-37). The EEC Treatyensures the free movement of goods between member States by three means:22the elimination of customs duties and charges having equivalent effect (Arts 1217); the elimination of quantitative restrictions and measures having equivalenteffect (Arts 30-37); and the prohibition of discriminatory taxation (Arts 95-99).23It is clear that in Australia, a State law or measure would be unconstitutional ifit purported to impose charges equivalent to customs duties on goods importedfrom another State,24 or if it imposed discriminatory taxation on interstategoods.25 This study will therefore concentrate on the provisions of the EECTreaty dealing with quantitative restrictions and measures having equivalenteffect. The most important of these provisions is Art 30, which provides asfollows:

Quantitative restrictions on imports and all measures having equivalent effectshall, without prejudice to the following provisions, be prohibited betweenMember States.

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(Art 177). The national court will then give judgment in the matter before it, takingaccount of the ruling given by the Eel.Art 2: The Community shall have as its task, by establishing a common market andprogressively approximating the economic policies of Member States, to promotethroughout the Community a harmonious development of economic activities, acontinuous and balanced expansion, an increase in stability, an accelerated raising ofthe standard of living and closer relations between the States belonging to it.Eg the banking cases. such as Bank of New South Wales v Commonwealth (1948) 76CLR 1, Commonwealth v Bank of New South Wales (1949) 79 CLR 497; and thetransport cases, such as Hughes and Vale Pty Ltd v New South Wales (No 1) (1953)87 CLR 49, Finemores Transport Pty Ltd v New South Wales (1978) 139 CLR 338.R v Smithers; Ex parte Benson (1912) 16 CLR 99; Gratwick v Johnson (1945) 70CLR 1; Cole v Whitfield, supra n 3, 393.Halsbury's Laws of England, supra nil, Vol 52, 91, para 12.49 n1.Article 95 provides in part: No Member State shall impose, directly or indirectly, onthe products of other Member States, any internal taxation of any kind in excess ofthat imposed directly or indirectly on similar domestic products. Furthermore, noMember State shall impose on the products of other Member States any internaltaxation of such a nature as to afford indirect protection to other products.Under s 90, if not under s 92: Cole v Whitfield, supra n 3, 407. See alsoCommonwealth and Commonwealth Oil Refineries Ltd v South Australia (1926) 38CLR 408.Bath v Alston Holdings supra n 5, is a case in point.


Articles 31-33 are transitional, providing for the gradual abolition of existingimport restrictions. Article 34 contains a similar prohibition on restrictions onexports. Article 36 provides an express exception to Arts 30-34, permittingrestrictions justified on certain grounds such as public policy, or publicmorality, health or security.26

3 THE APPLICATION OF ARTICLE 30 OF THE EEC TREATY

The case law of the ECJ on Art 30 is substantial. It is only possible here togive an overview of its operation.27 It will be noted that Art 30, unlike s 92 ofthe Australian Constitution, is not couched in terms of absolute freedom oftrade, but rather in terms of the elimination of a particular type of barrier to freetrade, namely quantitative restrictions and measures having equivalent effect. Aquantitative restriction is one which for instance imposes a quota system on theimport of certain types of goods,28 or even imposes an outright ban on theirimportation.29 However, the Court has given an extremely broad interpretationto the words "measures having equivalent effect", in line with the general aim ofthe Treaty in establishing a common market. This interpretation has beenexpressed in the so-called "Dassonville formula", which was first applied inProcureur du Roi v Dassonville3o and has been repeated consistently since:

All trading rules enacted by Member States which are capable of hindering,directly or indirectly, actually or potentially, intra-Community trade are to beconsidered as measures having an effect equivalent to quantitative restrictions.

It can be seen that according to this formula, the effect of the law of a memberState need not actually hinder trade, but only be capable potentially of hinderingtrade in order to be inconsistent with Art 30. Moreover, other cases have heldthat the actual or potential hindrance need not be substantial: any hindrance,however slight, will be caught.31 Nor, of course, is the provision confined torestrictions imposed at the frontier.

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Art 36: The prOViSions of Arts 30 to 34 shall not preclude prohibitions orrestrictions on imports, exports or goods in transit justified on grounds of publicmorality, public policy or public security; the protection of health and life ofhumans, animals or plants; the protection of national treasures possessing artistic,historic or archaeological value; or the protection of industrial and commercialproperty.~Such prohibitions or restrictions shall not, however, constitute a means ofarbitrary discrimination or a disguised restriction on trade between Member States.See also the literature cited supra nIl; P Oliver, Free Movement of Goods in the EECUnder Articles 30 to 36 of the Rome Treaty (2nd edn, 1988); F Burrows, FreeMovement in European Community Law (1987); L W Gonnley, ProhibitingRestrictions on Trade Within the EEC: The Theory and Application of Articles 30-36of the EEC Treaty (The Hague 1985). On the development of the presentinterpretation of Art 30, see also A W H Meij and J A Winter, "Measures Having anEffect Equivalent to Quantitative Restrictions" (1976) 13 Common Marlcet LawReview 79.Eg Salgoil SpA v Italian Ministry for Foreign Trade (Case 13/68) [1968] ECR 453,(1969] CMLR 181.Eg EEC Commission v Italy (Re Ban on Porle Imports) (Case 7/61) [1961] ECR 317,[1962] CMLR 39.(Case 8n4) [1974] ECR 837, [1974] 2 CMLR 436, para 5.Ol/icier van lustitie v Van de Haar (Joined cases 177-178/82) [1984] ECR 1797,[1985] 2 CMLR 566; Prantl (Case 16/83) [1984] ECR 1299, [1985] 2 CMLR 238.


The Dassonville formula clearly catches all laws of member States that areexpressed to apply specifically to imports or the act of importing. Thus, a lawwhich required a licence to be obtained in respect of the import of certain typesof goods from another member State would be inconsistent with Art 30, even ifthe requirement was a mere formality and a licence was in fact always grantedfree of charge upon application.32 As Art 30 applies also to laws that "indirectly"hinder trade, it will prohibit measures which expressly discriminate againstimported goods, in so far as they apply to goods imported from another memberState, even if they do not apply to the act of importation itself. Thus, in ECCommission v Hellenic Republic33 the Court declared that Greece had failed tofulfil its obligations under Art 30 by requiring the Agricultural Bank of Greece,the main credit institution of the agricultural sector, not to make available loansfor the purchase of imported agricultural machinery unless no Greek-mademachinery was available. Similarly, State supported campaigns encouragingconsumers to prefer domestically produced goods over imported goods, while notdirectly in any way hindering importers of goods from other member States,have been held to be measures equivalent to quantitative restrictions.34

The Dassonville formula also extends to those laws of member States which,while on their face applying equally to local products and imports, operate inpractice to discriminate against goods imported from other member States and toprotect particular local goods or a local industry. In EC Commission v Italy (ReAged Buses)35 the Court considered an Italian decree which provided that no busmore than seven years old could be tested for roadworthiness with a view toobtaining first registration in Italy. The Court declared that Italy had failed tofulfil its obligations under Art 30, since although the law did not distinguishbetween Italian and foreign buses, its main effect was found to be to preclude theimport of buses more than seven years old. Gilli and Andres36 concerned anItalian decree prohibiting the marketing or holding for sale of any productcontaining acetic acid (that is vinegar) not derived from the acetic fermentation ofwine. The Court considered the principal effect of the provision was to protectthe Italian wine vinegar industry against different types of imported vinegar, andruled that Art 30 was to be understood as encompassing such measures in so faras they affected goods produced in another member State.3?

Other cases demonstrate that Art 30 applies in the case of member State lawswhich are expressed to apply equally to domestic and imported goods of a certain

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International Fruit Co NY v Produklschap voor Groenten en Fruit (Joined cases 5154nl) [1971] ECR 1107, para 9; EC Commission v United Kingdom (Re um Milk)(Case 124/81) [1983] ECR 203, [1983] 2 CMLR 1, para 9.(Case 192/84) [1985] ECR 3967.EC Commission v Ireland (Re "Buy Irish" Campaign) (Case 249/81) [1982] ECR4005, [1983] 2 CMLR 104; Apple and Pear Development Council v K J Lewis Ltd(Case 222/82) [1983] ECR 4083, [1984] 3 CMLR 733.(Case 50/83) [1984] ECR 1633, [1985] 1 CMLR 777.Italian State v Gilli and Andres (Case 788n9) [1980] ECR 2071, [1981] 1 CMLR146.See also EC Commission v United Kingdom (Re Origin Marking of Retail Goods)(Case 207/83) [1985] ECR 1201, [1985] 2 CMLR 259: a United Kingdom lawrequiring both domestic and imported goods to be labelled with country of origin wasinconsistent with the EEC Treaty, as it enabled the consumer "to give his preferenceto national products" (at para 20).


kind, and which do not in practice discriminate against the import of the foreigngoods generally, but which do by their terms necessarily place practical obstaclesin the path of particular categories of traders. The De Peijper case38 concerned aDutch law which required the importer of pharmaceutical products to producecertain documentation issued by the manufacturer. The law was a measure havingequivalent effect to a quantitative restriction as it restricted the import trade tothose who had the approval of the manufacturer (who could refuse to providenon-approved traders with the documentation), thus enabling a controlleddistribution network to be established. In the Dassonville case39 itself, the Courtconsidered a Belgian law requiring goods bearing a designation of origin (forexample, "Scotch whisky") to be accompanied by a certificate of authenticityissued by the government of the State of origin. The Court considered that thislaw favoured traders importing directly from manufacturers, since tradersacquiring the goods in free circulation, especially from wholesalers in thirdcountries, faced serious difficulty in obtaining such certificates. It ruled that Art30 encompassed measures such as these.

However, the operation of Art 30 is far broader than this. The ECJ hasacknowledged that trade in goods may be hindered by the mere fact of disparitybetween the national laws of member States, even though these national lawsapply equally to domestic and imported goods. For instance, the Oosthoek case4°concerned a Netherlands consumer protection law prohibiting the use of certainfree gifts as a sales promotion device. A trader prosecuted under the law, whosold encyclopaedias in several countries including the Netherlands, argued thatthe law obliged him to adopt different promotions schemes within the onecommon market This required him to incur additional costs, thereby hinderinghis trade between member States. The Court accepted that the peculiarities of theNetherlands law did hinder trade between member States, but at the same timeupheld the validity of the law, recognising each member State's capacity toregulate matters such as consumer protection.

The test for reconciling the principle of the free movement of goods with themember States' powers of regulation was laid down in the Cassis case.41 Thatcase concerned the importation into Germany of "Cassis de Dijon", a Frenchfruit liqueur containing 15-20 per cent alcohol. Under German law, fruit liqueursof this type could only be marketed if they had a minimum alcohol content of 25per cent. Germany argued that the law was not discriminatory, that Art 30 didnot apply to obstacles to trade arising merely from the fact that two memberStates had different laws, and that obstacles of this nature fell to be removedthrough the enactment of uniform EEC legislation. The Court said:

In the absence of common rules relating to the production and marketing of ofalcohol ... it is for the Member States to regulate all matters relating to theproduction and marketing of alcohol and alcoholic beverages on their ownterritory. Obstacles to movement within the Community resulting fromdisparities between the national laws relating to the marketing of the products

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(Case l04n5) [1976] ECR 613. [1976] 2 CMLR 271.Supra n 30.Oosthoelc's Uitgellersmaatschappij BV (Case 286/81) [1982] ECR 4575. [1983] 3CMLR 428.Rewe-Zentral AG 11 BU1Ulesmonopolverwaltung fur Branntwein (Case 120n8) [1979]ECR 649. [1979] 3 CMLR 494.


in question must be accepted in so far as those provisions may be recognised asbeing necessary in order to satisfy mandatory requirements relating in particularto the effectiveness of fiscal supervision, the protection of public health, thefairness of commercial transactions and the defence of the consumer.42

This principle, now known as "the Cassis principle" has constantly beenrepeated in subsequent cases and has been referred to as the "rule of reason".43

The case establishes that any law of a member State which applies uniformly inrespect of both domestic and imported goods will nonetheless constitute ameasure having equivalent effect to a quantitative restriction if it is in any waycapable of hindering trade with other member States, unless it can be established,first, that it serves some legitimate State purpose,44 and secondly, that it isnecessary (a "mandatory requirement") to achieve that purpose. As the Court saidin the Walter Rau case:45

It is also necessary for such rules to be proportionate to the aim in view. If aMember State has a choice between various measures to attain the sameobjective it should choose the means which least restricts the free movement ofgoods.

In the Cassis case the Court went on to indicate a presumption that there is "novalid reason why, provided that [goods] have been lawfully produced andmarketed in one of the Member States, [they] should not be introduced into anyother Member State...".46

The potential ambit of Art 30 is therefore extremely broad, since in anysituation in which the laws of member States regulating trade are not uniform,the mere fact of this disparity could be said in some way to adversely affect tradebetween member States. The operation of the principle depends in practicelargely on how the Court determines what is a legitimate State interest or valueand what is necessary to advance it. It will suffice here to give three exampleseach of measures considered to fall within or outside the prohibition contained inArt 30.

First, as to measures falling within Art 30, in the Walter Rau case47 the Courtconsidered a Belgian law which required all margarine to be sold in cube shapedcontainers (to prevent consumers confusing it with butter). One of the partieswas a German company which produced margarine in round tubs in conformitywith Gennan law. The Court said:

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Ibid para 8 (emphasis added).Steiner, supra nIl, 65; Halsbury's Laws of England, supra nIl, Vol 52, 119, para12.83; L W Gormley, supra n 27, 51ff.The legitimate purposes referred to supra n 42 are not exhaustive. "The interests orvalues which are capable of benefiting from the rule of reason are not a closed class,although certain interests or values have been specifically recognised by the Court ofJustice": Halsbury's Laws of England, supra nIl, Vol 52, 121, para 12.84. These arecommonly categorised as consumer protection, prevention of unfair commercialpractices, protection of public health, environmental protection, improvement ofworking conditions, effectiveness of fiscal supervision (ibid 121-125, paras 12.8512.90), and, possibly, protection of cultural interests (ibid 121, para 12.84 n 2).Walter Rau Lebensmittelwerke v De Smedt PvbA (Case 261/81) [1982] ECR 3961,[1983] 2 CMLR 496, para 12.Supra n 41, para 14. See also the Communication of the Commission of 3 October1980, quoted in D Wyatt and A Dashwood, supra nil, 136.Supra n 45.


...[the Belgian law] considerably exceeds the requirements of the object in view.Consumers may in fact be protected just as effectively by other measures, forexample by rules on labelling, which hinder the free movement of goods less.48

Secondly, in EC Commission v Germany (Re Purity Requirements/or Beer)49the Court declared that Germany had failed to fulfil its obligations under Art 30by enacting a consumer protection law prohibiting the use of the description"beer" in connection with any beverage not made solely with specifiedingredients. These were the traditional ingredients of German beer, but beer hadhistorically been brewed with other ingredients in other member States. Germanyargued that German consumers associated the word "beer" only with traditionalGerman beer, and that the law was therefore a reasonable consumer protectionmeasure. The Court disagreed, saying that consumers' conceptions could evolveover time, and that the establishment of the common market would contribute tothis evolution. It considered that German legislation could not be used tocrystallise existing habits of German consumers, and thereby consolidate theexisting advantage of the German beer industry in the Gennan market.

Finally, in the Cassis case50 itself, the German Government argued that theGerman law on the minimum alcohol content of certain drinks avoided aproliferation of low alcohol drinks which "may more easily induce a tolerancetowards alcohol than more highly alcoholic beverages."51 Noting that a widerange of low alcohol drinks were available on the German market, the Court saidthat "the requirements relating to the minimum alcohol content of alcoholicbeverages do not serve a purpose which is in the general interest and such as totake precedence over the requirements of the free movement of goods, whichconstitutes one of the fundamental rules of the Community".52

On the other hand, in the Oosthoek case,53 the Court considered the consumerprotection law banning certain free gifts in sales promotions did not exceed whatwas necessary to prevent practices which "may mislead consumers as to the realprices of certain products and distort the conditions on which genuinecompetition is based".54 In the Cinetheque case55 the Court considered that theencouragement of the cinema industry was a legitimate purpose and that a Frenchlaw banning the sale of videotapes of films within a year of rust cinema releasedid "not exceed that which is necessary in order to ensure the attainment of theobjective in view ...".56 In the Eyssen case57 the Court considered a Dutch lawprohibiting the additive nisin in processed cheese to be consistent with Art 30,although the use of the additive was permitted in other member States. Scientific

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Ibid para 17.(Case 178/84) [1988] 1 CMLR 780.Supra n 41.Ibid para 10.Ibid para 14.Supra n 40.Ibid para 18.CinithAq.u SA v Federation Nationale des CinefNU Fran,ais (Joined cases 60-61/84)[1985] ECR 2605, [1986] 1 CMLR 365.Ibid para 22.Officier van Justitie v Koninlclijke Kaasfabrulc Eyssen BV (Case 53/80) [1981] ECR409, [1982] 2 CMLR 20.


studies suggested the safe level of the additive depended in part on dietary habits,which varied between the member States.

It should be noted that the Cassis rule of reason "does not so much providegrounds for derogating from Article 30 as define the circumstances in whichnational measures fall within Article 30 in the fIrst place".58 A law which doesnot satisfy the rule of reason and therefore contravenes Art 30 may nonethelessbe consistent with the EEC Treaty if it falls within the exception to Art 30contained in Art 36.59 Moreover, the only measures which can ever fall withinthe Cassis rule of reason are those which apply without distinction to nationaland imported products.f)() Laws which formally or materially discriminate againstimports can be justified only under the Art 36 exception to Art 30.

In conclusion, the broad interpretation which has been given Art 30 stemsdirectly from the use of the words "quantitative restrictions" in the text of thearticle. These words have focused attention on the actual effect of measuresadopted by member States on the flow of trade between member States.Measures which impose burdens on this trade will necessarily tend to restrict theamount of it, and therefore amount to "measures having equivalent effect" toquantitative restrictions. This will be so whether domestic trade in the samegoods thereby obtains a comparative advantage, or indeed, whether there evenexists a domestic trade in the same goods. This was made clear in the Cinethequecase.61 Although the ECl in that case ultimately ruled that Art 30 did not applyto the French law by virtue of the rule of reason, it considered Art 30 potentiallyapplicable notwithstanding the fact that the law applied to both domestic andimported video cassettes and was intended to promote cinema productiongenerally, not just French cinema production.

4 SECTION 92 AND ART 30 OF THE EEe TREATY COMPARED

Professor Lane sums up the new test for the interpretation of s 92 laid downin Cole v Whitfield by saying that "discriminatory protectionism is the forbiddenact".62 The High Court itself said in that case:

The history of s 92 points to the elimination of protection as the object ofs 92 in its application to trade and commerce. The means by which that objectis achieved is the prohibition of measures which burden interstate trade andcommerce and which also have the effect of conferring protection on intrastate

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D Wyatt and A Dashwood, supra nil, 142. See also Halsbury's Laws of England,supra nIl, Vol 52, 119, para 12.83. But see W H Smith Do-It-All Ltd vPeterborough City Council (United Kingdom, Queen's Bench Division) [1990] 2CMLR 577, 603-604.Supra n 26. It is not possible to deal here with all aspects of this provision, but seeinfra text at nn 70-71.EC Commission v Ireland (Case 113/80) [1981] ECR 1625; Theodor Kohl KG vRingelhan and Rennett SA (Case 177/83) [1984] ECR 3651, [1985] 3 CMLR 340;Gilli and Andres, supra n 36; Schutzverband gegen Unwesen in der Wirtschaft vWeinvertriebs-GmbH (Case 59/82) [1983] ECR 1217, [1984] 1 CMLR 319.Supra n 55; infra text at n 114-115.Supra n 4, 604. On the new test, see also] Goldsworthy and H P Lee, "ConstitutionalLaw", in R Baxt and G Kewley (eds) An Annual Survey of Australian Law 1988 1;C Howard, "Section 92 and the Discrimination Test" (1988) 62 LU 644 and "Section92 of the Constitution: the first rift in the new order" (1988) 62 LIT 760; R Cullen,"Section 92: Quo Vadis?" (1989) 19 UWAL Rev 90.


trade and commerce of the same kind. The general hallmark of measures whichcontravene s 92 in this way is their effect as discriminatory against interstatetrade and commerce in that protectionist sense.63

From this it would appear that the fact that a law imposes burdens on theinterstate trade in goods is not of itself sufficient to render it inconsistent withs 92. Rather, it is the fact of giving some comparative advantage to intrastatetrade over interstate trade that is the crucial consideration. Thus, says ProfessorLane,64 under the new test a law will not offend s 92 if it is discriminatorywithout being protectionist, or if it is protectionist without beingdiscriminatory, or if it affects interstate trade without being either discriminatoryor protectionist

In theory then, there is a remarkable contrast between the interpretation thathas been given Art 30 of the EEC Treaty and the current interpretation of s 92.In the case of Art 30, a provision which on its face is concerned with a particulartype of barrier to free trade ("quantitative restrictions and measures havingequivalent effect") has been interpreted to apply potentially to anything which inany way hinders or may hinder the free trade in goods between member States. Inthe case of s 92, the opposite has happened: words providing for free trade in thebroadest and most general tenns have had their operation restricted to particulartypes of measures interfering with the freedom of interstate trade (measureswhich are both discriminatory and protectionist). However, how different are theresults produced by the two provisions in practice?

A Laws applying expressly to imports onlyA law of an EEC member State which expressly applies to imports only will

be inconsistent with Art 30 of the EEC Treaty in so far as it relates to importsfrom other member States, unless one of the exceptions in Art 36 is made out65A law of an Australian State which by its very terms applies only to importswill clearly be discriminatory for the purposes of the Cole v Whitfield test.66Although under this test a law must also be protectionist before it willcontravene s 92, there appears to be a virtual conclusive presumption that lawsexpressly discriminating against imports are protectionist. In Bath v AlstonHoldings the majority67 held invalid a Victorian law which included in thelicence fee for Victorian tobacco retailers an ad valorem amount in respect oftobacco sold by the retailer supplied from interstate wholesalers but not inrespect of tobacco supplied by Victorian wholesalers. The law was held invalidnotwithstanding the fact that it was clearly not intended to protect Victorianwholesalers at the expense of interstate wholesalers and that in practice it gaveVictorian wholesalers no market advantage.68 It would therefore appear that a

63646566

6768

Supra n 3, 394 (emphasis added).Supra n 4, 612.Supra text at nn 28, 29. 32-34. 60.In ,Bath v Alston Holdings, supra n 5, 424-425, differentiation was equated withdiscrimination.Mason CI, Brennan. Deane and Gaudron II.Under the same legislation a licence fee including an equivalent ad valorem amount inrespect of tobacco supplied to Victorian retailers was imposed on Victorianwholesalers. The minority (Wilson. Dawson and Toohey II) held that the law was notprotectionist since in effect the same fee was charged in respect of tobacco suppliedby interstate or local wholesalers. the only difference being that in the case of the


State law which, for instance, required a licence to be obtained in respect of theimport of goods from interstate would contravene s 92, even if a licence wereautomatically given to every applicant free of charge.69 On this the practicaleffects of s 92 and Art 30 accord.

Is it possible for the presumption that expressly discriminatory laws areprotectionist ever to be rebutted? Article 36 of the EEC Treaty provides anexception to Art 30 in the case of a law of a member State which does no morethan is necessary for giving effect to one of several specified purposes, such asthe protection of public health, morality or security.70 Although there are as yetno indications of how the Cole v Whitfield test applies to laws of this nature,one would expect the High Court not to strike down a State law which required,for instance, that all fruit imported into the State had to be inspected at theborder for fruit fly or other pests, or that imported meat be inspected locallybefore sale.71 As the Privy Council said in Commonwealth v Bank of NewSouth Wales72 tt ••• regulation of trade may clearly take the form of ... excludingfrom passage across the frontier of a State creatures or things calculated to injureits citizens."

B Laws discriminating against imports in practiceIn Cole v Whitfield the High Court made it clear that where a law "in effect, if

not in fonn, discriminates in favour of intrastate trade, it will nevertheless offendagainst s 92 if the discrimination is of a protectionist character".73 There is nodoubt that the outcome of cases such as Re Aged Buses74 and Gilli and Andres75

69

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727374

75

fonner it was imposed at the retail level and in the case of the latter at the wholesalelevel.Compare the International Fruit Company NY case, supra n 32, with the pre-Cole vWhitfield cases Ackroyd v McKechnie (1986) 161 CLR 60 and James vCommonwealth (1936) 55 CLR 1. A requirement of a licence to sell (rather thanimport) both domestic and imported products of a particular kind should not of itselfoffend against s 92 provided licence fees do not discriminate between the two (seealso Fox v Robbins (1910) 8 CLR 115).Supra n 26.Under Art 36 of the EEC Treaty inspection of imported produce for pests and diseaseis justified (Rewe-Zentralfinanz GmbH (Case 4n5) [1975] ECR 843, [1976] 1 CMLR599; Commission v Ireland (Re Protection of Animal Health) (Case 74/82) [1984]EeR 317), but not if checks of a similar standard have already been carried out by theauthorities of the State of export (Commission v United Kingdom (Re U1lf Milk),supra n 32). Cf earlier Australian cases on inspections of imported goods such asBernard & Co Pty Ltd v Langley (1980) 32 ALR 57. In relation to public morality, inthe EEC a member State may for instance ban the import of pornographic materialdefined to include some material not actually illegal in the banning State (R v Hennand Darby (Case 34n9) [1979] ECR 3795, [1980] 1 CMLR 246, [1981] AC 850), butcannot ban the import of types of material (in this case "love dolls") that may befreely manufactured and marketed locally: Conegate Ltd v HM Customs and Excise[1987] QB 254. Cf also Literature Board of Review v Transport Publishing Co PtyLtd [1955] QSR 466 and (1956) 99 CI..R Ill, and Commonwealth of Australia, FinalReport of the Constitutional Commission (Canberra 1988) Vol 2, 808, para 11.178.(1949) 79 CLR 497, 641.Supra n 3, 408; Castlemaine Tooheys, supra n 6, 466-467.Supra n 35.Supra n 36.


would have been the same if decided by the High Court under the Cole vWhitfield teSt.76

C Burdens caused by disparate State lawsMore interesting are the cases of the Cassis type, in which State laws apply

equally to interstate and intrastate trade, but in which burdens are indirectlyimposed on interstate trade by virtue of the lack of uniformity between theapplicable State laws. The facts of many of the cases decided by the ECJ underthe Cassis principle have close analogies in s 92 cases.77 Both Cole v Whitfieldand Castlemaine Tookeys were cases of of the Cassis type.

Cole v Whitfz.eld concerned the validity of a Tasmanian regulation prohibitingthe "buying, selling or offering or exposing for sale, or the having possession orcontrol of' any crayfish under a prescribed size. The regulation was intended toconserve breeding stocks of crayfish in Tasmanian waters. South Australia had asimilar law, which prescribed a smaller minimum size which was consideredsufficient to preserve stocks of crayfish in South Australian waters. Therespondents, Tasmanian crayfish traders, had ordered and taken delivery of aconsignment of crayfish from a South Australian supplier, all of which werelarger than the minimum size prescribed by South Australian law. Onsubsequent inspection by Tasmanian officials some of the crayfish in theconsignment were found to be below the minimum size prescribed by Tasmanianlaw. The respondents were prosecuted for possession.

The High Court upheld the Tasmanian law. It said that as "[t]he prohibitions... apply alike to crayfish caught in Tasmanian waters and to those that areimported ... no discriminatory protectionist purpose appears on the face of thelaw. "78 And since "... the object of the prohibitions ... is to assist in theprotection and conservation of ... the stock of Tasmanian crayfish", its object oreffect was not discriminatory, even though the prohibitions were"unquestionably a burden on the interstate trade and commerce in crayfish caughtin South Australian waters and sold in Tasmania".79

Does this mean though that the Tasmanian law would have been valid nomatter how great the burden on interstate trade and commerce, and no matter howunreasonable the measure, absent some evidence of an actual covert intention toexclude South Australian crayfish from the Tasmanian market? The reason that

76

77

7879

CfO'Sullillan 1I Miracle Foods (SA) Pty Ltd (1966) 115 CLR 177, in which a SouthAustralian law requiring the ingredients of all margarine sold in the State to besubmitted for inspection by South Australian officials prior to manufacture was heldinvalid. Although on its face the law applied equally to local and interstatemanufacturers, it was obviously impracticable for interstate producers to comply withthe requirement. As to cases where the State law applies in practice to interstate tradeonly for the reason that there is no relevant intrastate trade, see infra Part 5.Compare Samuels v Readers' Digest Association Pty Ltd (1969) 120 CLR 1 with theOosthoek case, supra n 40; SOS (Mowbray) Pty Ltd v Mead (1972) 124 CLR 529with the Eyssen case, supra n 57; Castlemaine Tooheys with EC Commission 1I

Denmark (Re Disposable Beer Cans) (Case 302/86) [1989] ECR 4607, [1989] 1CMLR 619 (infra n 95); and the Miracle Foods case, supra n 76 (in which the HighCourt upheld a law requiring all margarine sold in South Australia to be in containersbearing the inscription "margarine" in letters of a particular size and style) with theWalter Rau case, supra text at on 47-48.Supra n 3, 409.Ill.


the Tasmanian law was expressed to apply to all crayfish wherever caught wasthat it was not possible on inspection to determine whether a particular crayfIShhad been caught in Tasmanian or interstate waters. Suppose, however, that theTasmanian authorities could in fact on reasonable investigation have been able todetermine whether particular crayfish had been caught in Tasmania. Here theTasmanian law would have served a purpose, but only that of sparing theTasmanian authorities a small amount of administrative effort. And what if ithad been shown for instance that Tasmanian crayfish were a different subspeciesto those found in the rest of Australia, and that it was readily apparent just bylooking whether or not a particular crayfish had been caught in Tasmanianwaters? In such a case, the law would have no apparent purpose at all in itsapplication to crayfish caught in other States. In circumstances such as these,would the law still be consistent with s 92 on the basis that it is neitherdiscriminatory nor protectionist in the traditional sense of those expressions?

Had this case fallen to be decided under Art 30 of the EEC Treaty it wouldhave been necessary to apply a three stage test as follows:

(I) Is the Tasmanian law capable of hindering, directly or indirectly, actuallyor potentially, interstate trade? (Dassonville80)

(II) Is the law necessary to satisfy mandatory requirements relating to alegitimate Tasmanian purpose? (CassiS81 )

(Ill) Is the law proportionate to the aim in view, and in particular, is there analternative means to achieving it which would restrict less the freedom ofinterstate trade? (Walter Rau82)

In fact, this was precisely the approach adopted by the High Court. It held:(I) the Tasmanian law was "unquestionably a burden" on interstate trade;83

(II) "the object of the prohibitions ... is to assist in the protection andconservation of an important and valuable natural resource";84

(Ill) " ... the extension of the prohibitions ... to imported crayfish is anecessary means of enforcing [that object] ... [as] the local crayfish areindistinguishable from those imported from South Australia."85

It thus answered in the negative the question "whether the burden which theregulation imposes on interstate trade in crayfish goes beyond the prescription ofa reasonable standard to be observed in all crayfish trading .. ." .86 The Tasmanianlegislation did not pursue its object "in a way or to an extent which warrantscharacterization of the law as protectionist".87 Thus, it was the reasonableness ofthe measure, rather than its real object, that was crucial. The Court made it clearthat a State law could contravene s 92 notwithstanding that it "has as its real

80

81

828384858687

Supra n 30.Supra n 42.Supra n 45.Supra n 3, 409.Id.Ibid 409-410.Ibid 409 (emphasis added).Ibid 408 (emphasis added).


object the prescription of a standard for a product or a service or a norm ofcommercial conduct".88

This approach was followed again in Castlemaine Tooheys. The facts in thatcase were as follows. In 1986, South Australia had legislation the effect ofwhich was to impose a mandatory deposit of five cents on non-refillable beerbottles. The deposit was refundable on the return of the bottle by the consumerto a retailer. The purpose of the legislation was to promote litter control and toconserve energy and resources consumed in the production of beer bottles. Thisscheme made the use of non-refillable bottles more expensive for manufacturers,but as the use of non-refillable bottles was inherently cheaper than the use ofrefillable bottles, the "bottle cost" to manufacturers under the legislation wasvirtually identical for both types.

There were at the time four competing producers in the South Australianmarket Two were South Australian, one was Victorian, and one ("Bond") was agroup of companies brewing beer in Queensland, New South Wales and WesternAustralia for distribution throughout Australia. All the companies except Bondmanufactured beer in refillable bottles for the South Australian market. Bondused only non-refillable bottles. In 1986, Bond invested large sums of money ina campaign to increase its market share in South Australia. It met with somesuccess until later that year the South Australian legislation was amended toimpose a deposit of 15 cents on non-refillable bottles and four cents on refillablebottles (thereby making the bottle cost of the former substantially higher thanthe latter) and to require retailers to accept unlimited numbers of non-refillablebottles by way of return while permitting them to refuse returns of refillablebottles (thereby making retailers reluctant to stock beer in non-refillable bottles).The practical effect was to prevent Bond from increasing its market share aboveone percent while using non-refillable bottles, and it was uneconomic for it toconvert its interstate plants to use refulable bottles. Bond challenged the validityof the 1986 amendments under s 92.

The Court found:89

(I) The 1986 amendment "disadvantages the trade in beer brewed outside theState as against the trade in beer brewed within the State"90

(IT) The legislation "attempts on its face to solve pressing social problems ...[namely] the litter problem and the need to conserve energy resources"91

(llI) "... neither the need to protect the environment ... nor the need toconserve energy resources offers an acceptable explanation or justificationfor the differential treatment given to the products of the Bond brewingcompanies. tt92 The measures were not "appropriate and adapted to theresolution of those problems" ,93 but rather were "disproportionate to theirachievement".94

8889

9091929394

Id.Joint judgment of Mason CJ, Brennan, Deane, Dawson and Toohey JJ. In a jointjudgment, Gaudron and McHugh JJ concurred.Supra n 6, 472.Id.Ibid 477.Ibid 473; 480 per Gaudron and McHugh II.Id.


The reason for the Court's third conclusion was that as Bond's non-refillablebottles were manufactured outside the State, discouraging their use would notresult in a saving of State resources; on the contrary, a diminution of Bond'smarket share would most likely lead to a corresponding increase in local beerbottle production. The Court also saw no reason why a measure aimed atcontrolling litter required refillable and non-refillable bottles to be treateddifferently in order to be effective.95

In Cole v Whitfield and Castlemaine Tooheys the High Court can thus be seento have developed a rule of "reasonableness",96 or of "appropriateness andadaptedness",97 or of "proportionality",98 which operates in a manner similar tothe Cassis rule of reason in the EEC.99 There are, however, three apparentdifferences between the two rules.

The first is that the Cassis rule of reason requires the Court to enquire whetherthe measures adopted are "necessary" or "required" to achieve their objectives.tooBy contrast, the High Court in Castlemaine Tooheys expressly said that "itwould place the Court in an invidious position if the Court were to hold thatonly such regulation of interstate trade as is in fact necessary for the protection

95

96979899

100

It is interesting to compare this case with EC Commission v Denmark (ReDisposable Beer Cans), supra n 77, in which both the facts and the outcome weresimilar to Castlemaine Tooheys. In that case, a Danish law had established acompulsory deposit-and-return scheme for soft drink and beer containers. The lawfurther prohibited more than 3000 hl of drinks per producer per annum being sold incontainers that had not been approved by the Danish Government. The Government'spolicy was to keep to a minimum the number of types of approved containers inorder to facilitate the handling of containers that had been returned to retailers. It wastherefore difficult for foreign producers to obtain approval for their containers wheresimilar Danish containers had already been approved. H they were to sell more than3000 hI per annum in Denmark, they had, at some expense to themselves, to convertto the use of approved Danish containers. The EC] found: (I) That the Danish lawimposed restrictions on the free movement of goods between member States: para 12;(II) That the "protection of the environment is a mandatory requirement which maylimit the application of Art 30 of the Treaty": para 9; (III) That the deposit and returnscheme was necessary to attain the objectives of the disputed law: para 13, but thatDenmark had failed to fulfil its obligations under Art 30 in so far as it limited to3000 hl the amount of beer and soft drinks that could be imported in non-approvedcontainers. In this respect the objectives of the law could have been attained by moreproportionate measures: para 21.Supra text at n 86.Supra text at n 93.Supra text at n 94.The test of reasonableness developed by the High Court in these two cases is notentirely novel. In some of the earlier s 92 cases the Court applied a concept of"reasonable regulation". See L Zines, supra n 1, 115-118, 127-136; P H Lane, TheAustralian Federal System (2nd ed 1979) 766; Uebergang v Australian Wheat Board(1980) 145 CLR 266, 306 (per Stephen and Mason II); Bernard &: Co Pty Ltd vLangley (1980) 32 ALR 57. In the Miracle Foods case, supra no 76-77, Windeyer]said of the margarine labelling requirement "To insist on this is not to impose animpediment on honest trade and commerce ... No honest trader can object to arequirement that his wares be marked by their proper name and sold under thatdescription" (at 196). This is precisely the type of regulation the ECI envisagedwould be consistent with Art 30 of the EEC Treaty in the Walter Rau case (supra textat n 48).Supra text at n 42 ("necessary", "mandatory requirements"); supra text at n 48 ("therequirements of the objective").


of the community is consistent with the freedom ordained by s 92. The questionwhether a particular legislative enactment is a necessary or even a desirablesolution to a particular problem is in large measure a political question best leftfor resolution to the political process." IOI The Court preferred instead thecriterion of whether the State law was "appropriate and adapted" and"proportionate" to the resolution of the problems it addressed.l02 However, in theEEC, the test of "necessity" is usually also treated as one of proportionality,103and in Cole v Whitfield the High Court used the terms "necessary" and"reasonable" interchangeably when describing the Tasmanian legislation.104 It istherefore suggested that this difference could be more apparent than real.

A second difference between the two approaches stems from the fact that therange of interests that a law falling within the Cassis rule of reason may seek toprotect is limited.l0s In Castlemaine Tooheys, on the other hand, the High Courtexpressly rejected the view that a State law burdening interstate trade could beinvalid inder s 92 by reason alone that it served no "legitimate" State interest,l06suggesting that there are no limits to the categories of values or interests thatState laws falling within the High Court's "appropriate and adapted" test mayseek to protect. This, presumably, is also considered to be "in large measure apolitical question best left for resolution to the political process". However, heretoo the difference might be more apparent than real. First, the categories of lawsjustifIable under the Cassis rule of reason, while limited, have never been held tobe closed.l07 Secondly, the EC] has expressly recognised that "account must ...be taken of the powers of Member States as regards their ... laws in so far asthey have not been harmonized or replaced by Community provisions ...",108just as the High Court has said that"subject to the Constitution, the legislatureof a State has power to enact legislation for the well-being of the people of thatState".109 Thirdly, the vast majority of State laws of general application whichincidentally impose burdens on interstate trade are likely to fall within one of thecategories recognised by the Ee] under the Cassis rule of reason.l 10 This is true

101102

103

1041~

106

1071~

1<9110

Supra n 6. 473.The "appropriate and adapted" fonnula was borrowed from the "analogous field" of theimplementation of treaty obligations by the Commonwealth: at 473, referring toCommonwealth v Tasmania (Tasmanian Dam case) (1983) 158 CLR 1, Richardson vForestry Comission (1988) 164 CLR 261.Halsbury's Laws of England, supra nil. Vol 52, 120, para 12.83 n 10. See alsosupra text at n 45, EC Commission v Denmark (Re Disposable Beer Cans), supra n77, paras 13 and 21, and EC Commission v France (Re Italian Table Wine) (Case42/82) [1983] ECR 1013, [1984] 1 CMLR 160, para 54: "the measures ... carried outmust be necessary for attainment of the desired objectives and must not createobstacles to trade which are disproportionate to those objectives."Supra n 3, 409. See also Castlemaine Tooheys, 472.Supra n 44.Supra n 6. 470-471. On this ground, the Court expressly distinguished the Americancases on the commerce clause, such as Pike v Bruce Church Inc 397 US 137, 142(1970): "If a legitimate local purpose is found, then the question becomes one ofdegree."Supra n 44.EC Commission v Italy (Re Customs Agents) (Case 159n8) [1979] ECR 3247, 3259,[1980] 3 CMLR 446, 459.Castlemaine Tooheys. supra n 6, 472.Supra n 44.


of the laws under review in both Cole v Whitfield and Castlemaine Tooheys.Having identified strong State interests in both cases, any comments by theHigh Court as to the outer limits of the "appropriate and adapted" test werenecessarily obiter. Fourthly, it is necessary under the High Court's test toidentify some State purpose, in order to be able to determine if the measureadopted is "appropriate and adapted" to that purpose. In Castlemaine Tooheys,the High Cowt indicated that if the South Australian law could not be identifiedas serving any purpose, it would contravene s 92.111 Finally, the High Courtrefers in Castlmaine Tooheys to State laws for "the protection of the communityfrom a real danger or threat to its welfare or [for] the enhancement of itswelfare".112 It therefore seems open to the High Court to hold in future cases thatcertain State interests are so insignificant or trivial by comparison with theserious effect on interstate trade of measures adopted to protect them, that anysuch measures will contravene s 92.

The third apparent difference between the Cassis principle and the new test fors 92 is, however, fundamental. In order to be invalid under s 92, a law of anAustralian State is required to have a protectionist effect. As the High Court saidin Castlemaine Tooheys:

Cole v Whitfield established that a law which imposes a burden on interstatetrade and commerce but does not give the domestic product or the intrastate tradein that product a competitive or market advantage over the imported product orthe interstate trade in that product, is not a law which discriminates againstinterstate trade and commerce on protectionist grounds.113

Most of the laws that the EC] has considered incompatible with Art 30 wouldhave satisfied the High Cowt's test of "discriminatory protectionism", and in factat one time it was widely considered that Art 30 was concerned only withprohibiting laws which had some discriminatory or protectionist effect. In theCinetheque case,114 Advocate General Slynn said in his opinion that

where a national measure is not specifically directed at imports, does notdiscriminate against imports, does not make it any more difficult for animporter to sell his products than it is for a domestic producer, and gives noprotection to domestic producers, then in my view, prima facie, the measuredoes not fall within Article 30 even if it does in fact lead to a restriction orreduction of imports.

However, the Court in that case rejected this view. It said that even if a law"does not have the purpose of regulating trading patterns [and] its effect is not tofavour national production as against the production of other member States, ...[it] may create barriers to intra-Community trade ...". Such a law, said theCourt, would be incompatible "with the principle of the free movement of goodsprovided for in the Treaty" unless it satisfied the "rule of reason") 15

111

11211311411S

Supra n 6, 472: "If the South Australian legislation were not attempting to provide asolution to these problems, the burden on interstate trade would be discriminatory ina protectionist sense... "Id (emphasis added).Ibid 467.Supra n 55, 2611.Ibid paras 21-22. See also Torfaen Borough Council vB&: Q pic (Case 145/88)[1990] 1 CMLR 337, [1990] 1 All ER 129 in which the ECl held that a UnitedKingdom law banning Sunday trading would be inconsistent with Art 30 unless it


5 THE REQUIREMENT OF A PROTECI10NIST EFFECT FORINVALIDITY UNDER S 92: SOME QUESTIONS

From the preceding discussion it can be seen that in practice the High Court'snew test of invalidity under s 92 is in most respects similar to the "rule ofreason" applied by the ECJ in Art 30 cases. The only major difference is that incases of the Cassis type, there is an additional requirement of a protectionisteffect for invalidity under s 92. In such cases, a law of an EEC member Statewill be inconsistent with Art 30 if it imposes unreasonable or disproportionateburdens on intra-Community trade in goods. A law of an Australian State willbe invalid under s 92 if it imposes unreasonable or disproportionate burdens oninterstate trade in goods and gives intrastate trade a competitive advantage. Inmost cases, a State law which failed the test of reasonableness would also be alaw which is "protectionist" within the meaning of the Cole v Whitfield test.However, a State law that manifestly failed the rule of reasonableness wouldappear not to be protectionist, and consequently valid under s 92, if it imposesequal burdens on interstate and intrastate trade,116 or if there are no domesticgoods competing with the imported goods affected by the law. In the latter case,it would even seem consistent with s 92 for a State law to subject the importedgoods to an outright ban. The additional requirement of a protectionist effect forinvalidity under s 92 in such cases raises a number of questions.

A Is the requirement ofa protectionist effect consistent with the purposes ofs 92?

The history of the interpretation of s 92 has been described as the search for an"unstated predicate". The High Court has always realised that the purpose ofs 92 in proclaiming interstate trade to be "absolutely free" could not have beento render it "so immune from legislative or executive interference that ... anarchywould result") 17 The Court considered that the section merely failed to stateexpressly what it was that interstate trade and commerce was to be immunefrom. 118 As Coper has said:

... the bare words of s 92 are elliptical, ... the section stops short of sayingexpressly what it is from which interstate trade is to be absolutely free ... In

116

117

118

satisfied the rule of reason, notwithstanding that it affected sales of domesticallyproduced goods to the same extent as sales of imported goods.In Cole v Whitfield the Court referred to, but did not adopt, opinions expressed inearlier cases that a law could contravene s 92 while placing equal burdens oninterstate and intrastate trade: at 404-405, quoting New South Wales vCommonwealth (1915) 20 CLR 54, 68 (per Griffith eJ); Bank of New South Wales vCommonwealth (the Banking case) (1948) 76 CLR 1, 386-387 (per Dixon I, quotingFrankfurter I in Freeman v Hewit 329 US 249, 252 (1947».Supra n 3, 393-394, citing Duncan v Queensland (1916) 22 CLR 556, 573;Freightlines & Construction Holding Ltd v New South Wales (1967) 116 CLR 1, 4-5,[1968] AC 625, 667.Ibid 394: "... the failure of the section to define expressly what interstate trade andcommerce was to be immune from is to be explained by reference to the dictates ofpolitical expediency, not by reference to a purpose of prohibiting all legal burdens,restrictions, controls or standards."


other words, the unstated predicate could as well be freedom from customs duties,or freedom from obstruction by men with green eyes and blue hats ...! 19

The Court's conclusion in Cole v Whitfield that s 92 was intended to renderinterstate trade and commerce absolutely free from discriminatory protectionismwas based on a lengthy examination of the nineteenth century debates leading upto the final drafting of the section. The Court conciuded120 that "The expression'free trade' commonly signified in the nineteenth century, as it does today, anabsence of protectionism, ie, the protection of domestic industries againstforeign competition".

To overemphasise the concept of free trade as it was understood immediatelyprior to Federation would, however, be misleading. The passages from theConstitutional Debates quoted in Cole v Whitfield indicate that the drafters ofs 92 were preoccupied with the removal of five types of barriers to trade thenprevalent: tariffs on imports, non-tariff barriers such as quotas, differentialrailway rates, subsidies on local goods, and discriminatory burdens on dealingwith imports.l21 The High Court has always accepted that s 92 must have abroader operation than this, and it reaffirmed in Cole v Whitfield that "[t]he fivetraditional examples of protection of domestic industry ... are by no meansexclusive or comprehensive. The means by which domestic industry or trade canbe advantaged or protected are legion."I22 Moreover, just as the operation of s 92today should not be restricted by the types of protection known in the nineteenthcentury, it should not be confined to the limits that existed to the very conceptsof "free trade" and "protectionist" at the time the Constitution was drafted,bearing in mind that "it is a Constitution we are interpreting, an instrument ofgovernment meant to endure" .123 In the North Eastern Dairy case,l24 Mason Jsaid expressly that "The freedom guaranteed by s 92 is not a concept of freedomto be ascertained by reference to the doctrines of political economy whichprevailed in 1900; it is a concept of freedom which should be related to adeveloping society and to its needs as they evolve from time to time".l25Government and economics have undergone momentous developments over thelast century. At a time when government regulation of the economy wasminimal, the drafters of the Constitution could not have contemplated thepractical impediments to interstate trade which might arise, for instance, from

119120

121122123

12A

125

Supra n 1, 297.Supra n 3, 392-393.Ibid 393.Ibid 408-409.Australian National Airways Pty Ltd v Commonwealth (1945) 71 CLR 29, 81 (perDixon J). Thus, while the nineteenth century concepts may constitute the 'centre' ofs 92, they do not necessarily constitute the 'circumference': cf Attorney -General(NSW) v Brewery Employees Union of NSW (the Union Label case) (1908) 6 CLR469, 610 (pe r Higgins J).North Eastern Dairy Co Ltd v Dairy Industry Authority of New South Wales (1975)134 CLR 559.Ibid 615. Also New South Wales v Commonwealth (the Incorporation case) (1990)169 CLR 482, 511 (per Deane J (dissenting)): "... it is not permissible to constrictthe effect of the words which were adopted by the people as the compact of a nationby reference to the intentions or understanding of those who participated in orobserved the Convention Debates" (citing Breavington v Godleman (1988) 169 CLR41, 131-133).


the lack of uniformity in State consumer protection or environmentallegislation. Recourse to the notion of "free trade" as understood in the 18908 canbe of only limited assistance in addressing problems such as these.

The High Court in Cole v Whitfield in fact referred to the history of thedrafting of s 92

not for the purpose of substituting for the meaning of the words used the scopeand effect - if such could be established - which the founding fatherssubjectively intended the section to have, but for the purpose of identifying thecontemporary meaning of the language used, the subject to which that languagewas directed and the nature and objectives of the movement towards federationfrom which the compact of the Constitution fmally emerged.l 26

What then were the objectives of federation from which s 92 emerged? In thepast the section has commonly been referred to as a provision designed to uniteseveral separate colonial economies into an organic whole;l'J:1 to ensure that therewould be "one nation" in commerce;128 to establish an Australian commonmarket,129 and to that end to prohibit State measures which have the effect of"closing-up" the State from interstate trade,l30 or which "prevent or obstruct thefree movement of ... goods ... across State boundaries".!31 It has commonly beenassumed that the section was intended to enable every State to consider the entireCommonwealth as the potential market for its domestic industries,132 and toadvance the interests of the nation as a whole by establishing a single nationaleconomy which would be larger and more efficient than the sum of the six Stateeconomies. It would seem inconsistent with this purpose for one State to be ableto adopt unreasonable measures which have the practical effect of closing off orrestricting its part of the national market to trade from other States, whether ornot that State's domestic trade receives any advantage from the measures.Suppose, for instance, that State X adopts a law of general application which hasthe practical effect of halving the imports into that State of a particular productfrom other States. The impact of the law on the economies of the other States,and on the national economy as a whole, will be the same whether or not thelaw also has the" effect of halving the sales of domestic producers of the sameproduct, or whether or not the same product is manufactured in State X. In eithercase, the free flow of trade in the product between the other States and State X is

126

lZ7128129

130131132

Supra n 3, 385. See also the Incorporation case, supra n 125 at 501 (per Mason CI,Brennan, Dawson, Toohey, Gaudron and McHugh 11), citing Cole v Whitfield andPort MacDonnell Professional Fishermen's Association Inc v South Australia (1989)168 CLR 340, 375-377.M I Detmold, supra n 1, 32.P H Lane, supra n 99, 756.Bartler's Farms Pty Ltd v Todd (1978) 139 CLR 499, 523 (per Iacobs I); Samuels vReaders' Digest Association Pty Ltd (1969) 120 CLR 1, 14-15 (per Barwick CI);L Zines, supra n 1, 90, 120, 140-145; Commonwealth of Australia, Final Report ofthe Constitutional Commission (Canberra 1988) Vol 2, 774; M Coper, supra n 1, 3.M I Detmold, supra n 1, 34.Cole v Whitfield, supra n 3, 391.Cf L Zines, supra n 1, 141. The view that s 92 is intended to guarantee the right ofthe individual trader to pursue his or her business across State boundaries hasgenerally been discredited: see L Zines, ibid 90-91, 100-105, 116-117, 145; MCoper, supra n 1, 305-307.


unilaterally restricted by State X, to the detriment of the other States and thenational economy as a whole.

The effect of a strict requirement of protectionism for invalidity under s 92would be that a State law, no matter how absurdly disproportionate to the objectit is intended to achieve and no matter how great the burden it incidentally placeson interstate trade, will be valid if it places equally absurd and disproportionateburdens on intrastate trade. However, it will be invalid if the burdens it places onintrastate trade, though nonetheless absurd and disproportionate, are only slightlyless than the burdens it places on interstate trade. Is there any fundamentaldistinction between the two cases? While the relative market shares of local andinterstate traders may remain unaffected in the former case, it is only minimallyaffected in the latter. At the same time, in both cases the law will have analmost identical effect in suppressing the overall trade in those goods, includingthe interstate ttade, within a "free trade" area.133

Of course, it cannot be argued that s 92 could deprive States of their power toregulate matters that otherwise fall within their constitutional competence. Norcould it be argued that s 92 prevents States from pursuing policies which areincompatible with those of other States, or which may have the incidental effectof placing some burdens on interstate trade. But it is surely tenable to argue thats 92 does require that State laws and measures which do impose burdens oninterstate trade should never be adopted without purpose, and that the burdensthey impose should not exceed that which is reasonably necessary to achieve thatpurpose.134

Suppose, to modify the facts of Cole v Whitfield, that no crayfish were foundin Tasmania, and that the purpose of the Tasmanian legislation was to preservecrayfish stocks in other States, on the basis that environmental issues are ofglobal concern. If these facts fell to be decided under Art 30 of the EEC Treaty,the Court would begin with the presumption that the crayfish, having beenlawfully caught and marketed in South Australia, should not be prevented byTasmania from being introduced into that State without reasonablejustification)35 The Court would ask whether Tasmania had a sufficient interestin seeking to protect the environment of other States to justify any measuresburdening interstate trade. If it did, it would be necessary to ask whetherTasmania could have achieved the purpose of its legislation by means lessburdensome on interstate trade (perhaps by relying on the South Australianauthorities to enforce their own legislation for preserving crayfish stocks inSouth Australian waters). On the other hand, if the High Court had to decide this

133

134

135

Cole Y Whitfield, supra n 3, 386, 391. Cf the opinion of Advocate General VanGerven in Torfaen Borough Council Y B & Q pic (supra nilS, para 18): "... therelevant comparison is not between imported and domestic products but betweennational markets. The prohibition of quantitative restrictions laid down in art 30,which is one of the mainstays of the unity of the Common Market, implies, ofcourse, that all national markets in the Community should remain sufficientlyaccessible to undertakings from other member States."Cf P H Lane, supra n 99, 757, who points out that since federation, the States cannotact as foreign countries towards eachother, and must be aware that everything they do"though seemingly within [their] own boundaries, is done in a federal milieu ... andcan have an effect on the other partners in the Federation and on national commerceand movement".Supra text at n 46.


case under s 92, would it simply hold that as Tasmania had no crayfish industry,the law was not protectionist and therefore valid? If South Australia considered itconsistent with the requirements of environmental protection to catchcommercially crayfish above a certain size from South Australian waters, and ifthe Commonwealth had taken no measures within the limits of its constitutionalpowers to prevent this, should Tasmania be able unilaterally to close off part ofthe national market in those crayfish, in order to give effect to its own opinionon the matter, no matter how disproportionate the measure?

To take another hypothetical case, suppose that in Castlemaine TooheysSouth Australia had had no domestic beer industry. The effect of the SouthAustralian legislation would have been to give an advantage to a Victorianbrewer over Bond, another interstate brewer. Would the South Australian law bevalid, on the basis that it confers no advantage on a domestic product, regardlesshow unappropriate and disproportionate the law is to the aim it is intended toachieve.136 What if the legislation had been intentionally designed for politicalreasons as a way of excluding a particular trader from the South Australianmarket? If the requirement of a protectionist effect were applied strictly, the lawwould be valid. Yet it seems difficult to justify an interpretation of s 92 thatwould permit a State at whim to exclude particular individuals from other Statesfrom trading in its market, provided the individuals' only competitors were otherinterstate traders, and one assumes that this is not a result that the drafters of theConstitution would have intended.137

B Is the requirement ofa protectionist effect workable?Establishing the existence of protectionism could be difficult in practice. To

be protectionist for the purposes of the Cole v Whitfield test, a State law mustgive a competitive or market advantage to a domestic product over an importedproduct, or to intrastate trade in a product over interstate trade in the produCt.138

To detennine the validity of the law, it is therefore necessary to establish, frrst,whether a particular domestic product and a particular imported product, or aparticular group of intrastate traders and a particular group of interstate traders,are in fact in competition. Secondly, it must be established whether the domesticproduct or the intrastate traders in fact receive some competitive or marketadvantage over the competition as a result of the law in question.

In Cole v Whitfield and the subsequent s 92 cases, the existence of domesticcompetition was clear.l39 In other cases it may be less obvious. Suppose that aState with a small car industry adopted measures to restrict the import of largeluxury cars from other States. Do small cars and luxury cars compete in thesame market? And do cars compete with bicycles? Does margarine compete with

136

137

138139

The DePeijper and Dassonville cases (supra nn 38-39) establish that such measureswould not be consistent with Art 30 of the EEC Treaty.Similarly. suppose that a State had no domestic beer industry. but introduced a systemof quotas for beer imported from other States. One would have thought that thedrafters of the Constitution would definitely have intended such a ,measure to beinvalid (Cole v Whitfield. supra n 3. 393). even though it gives no advantage to adomestic product.Supra text at n 113.Although in Bath v Alston Holdings there was disagreement on the question ofwhether there was in fact an advantage to intrastate traders.


butter? Do breakfast cereals compete with bacon and eggs?140 And is the degreeof competition between products a relevant consideration?141 Similarly, even ifcompetition between products has been established, it may be difficult todetermine whether the local product has received a competitive advantage as aresult of the State law. Assume for instance that competition did exist between aState's domestically produced small cars and luxury cars imported from otherStates, and that a law of that State had the practical effect of increasing the pricedifference between the two. The domestic industry would receive no advantagefrom the law if potential luxury car buyers were all still willing to pay thehigher prices for luxury cars. How would the High Court determine an issuesuch as this? One solution might be to respond by forging appropriatelycomplex economic tests, and require comprehensive expert evidence to be givenon the actual "cross-elasticity of demand"142 between the interstate productaffected by a law and the domestic product alleged to be in competition with it.In practice, such a process would be likely to be both time-consuming andinconclusive.143 The indications are that the High Court does not intend toproceed by this route.l44

C Will the High Court continue to insist on the requirement?The above discussion suggests that it may be more consistent with the

purposes of s 92, and more workable in practice, for the rule of "reasonableness"or "proportionality" to be the sole test of invalidity under s 92, without theadditional requirement that a law be "protectionist" to be invalid. Is the HighCourt likely to insist on the requirement in all future cases? In Cole v Whitfieldthe Court said that "In the interests of certainty, even in matters of constitutionalinterpretation, the Court does not readily discard or depart from settled

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141

142

143

144

In Cole v Whitfield the Court said that s 92 prevented a State from imposing burdenson interstate trade in order to protect intrastate trade "of the same kind" (at 394).Given that the test of invalidity under s 92 is intended to reflect social and economicrealities (ibid 408), a domestic and an imported product are presumably "of the samekind" in any case where the two products are capable of competing in the samemarket. In order to be protectionist, a State law should not have to discriminateagainst imported goods in favour of identical domestic goods. In Cole v Whitfield theCourt spoke in more general teons of laws which discriminate against interstate tradeor commerce in favour of intrastate trade (at 408) and in Castlemaine Tooheys of lawswhich "give the domestic product ... a competitive or market advantage over theimported product ..." (at 467). Cf also the definition of "market" in s 46 of the TradePractices Act 1974, discussed in Queensland Wire Industries Pty Ltd v The BrokenHill Pty Co Ltd (1988) 167 CLR 177, 188 (per Mason CJ and Wilson J, quotingHoffmann-La Roche & Co v EC Commission (Case 85n6) [1979] 1 ECR 461, 516,[1979] 3 CMLR 211, 272). (But see Professor Lane (supra n 4, 612), who appears to

disagree, saying that the High Court would have to "revise its understanding" of theCole v Whitfield test if it were to invalidate a State law which protected domesticbutter against imported margarine ).Cf L Zines, supra n 1, 141, citing D J Rose, "Federal Principles for the Interpretationof Section 92 of the Constitution" (1972) 46 AU 371, 375.An expression used in Part XVA of the Customs Act 1901 in relation to CommercialTariff Concession Orders: see s 269B (4) of that Act.On the provisions of the Customs Act referred to in n 142 above, see CorinthianIndustries (Syd) Pty Ltd v Comptroller-General of Customs (1989) 86 ALR 387,Amcor Ltd v Comptroller-General of Customs (1988) 79 ALR 221, Davies Craig PlyLid v Comptroller-General of Customs (1986) 68 ALR 105.See below, text at nn 147-148.


principle" )4S Given the general assumption that Cole v Whitfield represents adefinitive solution to one of the most intractable problems of Australianconstitutional law, suggestions that the test of "discriminatory protectionism"might be abandoned in future may be particularly unwelcome. At the same time,it is difficult to assert with any confidence that if the High Court were faced withthe hypothetical cases discussed above, it would rigidly and consistently holdthat no State law will be invalid under s 92 unless there is proof that the lawgives some comparative advantage to domestic goods or traders over importedgoods or interstate traders, regardless of the consequences that the result wouldhave for interstate trade. Even if the "discriminatory protectionism" formula is tobe retained, it may in future need to be further explained, qualified and subjectedto exceptions. The Court in Cole v Whitfield acknowledged that the new testbrought "a new array of questions in its wake" ,146 and these cannot have all beenanswered in only three cases.

From the cases so far, two qualifications to the requirement of protectionismare already apparent. The fIrst is that a State law need not, in order to satisfy thedefinition of "protectionist", be shown to give any actual or quantifiableadvantage to a domestic product over an imported product. In CastlemaineTooheys there was evidence that the South Australian law prevented Bond fromincreasing its market share above one percent, but the Court referred to noevidence that the market share that would otherwise have been captured by Bondwould necessarily be taken over by the South Australian producers, rather thantheir Victorian competitor. It simply assumed this to be the "natural effect" ofthe law.147 Similarly, in Bath v Alston Holdings the Court said that the effect ofthe Victorian law "would be likely to be that the out of State wholesalers wouldbe excluded from selling into Victoria" .148 It thus seems that a law will satisfythe criterion of "protectionist" if it merely appears to confer a potential advantageon intrastate trade over interstate trade. Secondly, a State law may beprotectionist for the purposes of s 92, even though it does not confer advantagesexclusively on domestic goods. The law in Castlemaine Tooheys was as muchto the potential benefit of the Victorian brewer as it was to the two SouthAustralian brewers. The fact that the law advantaged both domestic and someimported goods did not affect its chamcterisation as "protectionist".l49

There are other ways in which the High Court might qualify the defmition of"protectionist" in future. For instance, if a "protectionist" law need not advantagedomestic goods exclusively, it may not need to burden imported goodsexclusively. Presumably the law in Castlemaine Tooheys would still have,beeninvalid even if a small proportion of South Australian beer was also sold in nonrefillable bottles. Thus it is possible that a State law might be consideredprotectionist if it gave an advantage to domestic butter over imported margarine,even if it also gave some advantage to imported butter over domestically

145146147148149

Supra n 3, 400, citing Barlter's Farms Ply Ltd v Todd (1978) 139 CLR 499, 510.Ibid 408.Supra n 6, 476.Supra n 5, 426 (emphasis added).Supra n 6, 475: "Discrimination in the relevant sense against interstate trade isinconsistent with s 92, regardless of whether the discrimination is directed at, orsustained by, all, some or only one of the relevant interstate traders."


produced margarine.1SO It is also possible that a State law might be consideredprotectionist in a situation where there are no domestically produced goodscompeting with the imported goods affected by the law, but the law gives anadvantage to potential domestic producers of the product151

Thus in subsequent cases, the new test for invalidity under s 92 may turn outto have a much wider application than at first appears. It would clearly bepossible for these qualifications to the definition of "protectionist" to be appliedin such a way that the "protectionist effect" of most types of laws that place anykind of burden on interstate trade could never seriously be in issue. In such cases,argument would focus solely on the three-stage test of reasonableness, describedin Part 4 above, and the operation of s 92 would be essentially the same as thatof Art 30 of the EEC Treaty. One can only speculate as to how far the HighCourt might eventually follow this road. However, one obvious point needs tobe be made. If it were the case that a State law can never be invalid under s 92unless it gives a competitive advantage to domestic goods or traders overimported goods or traders, the result would be that the freedom of interstate tradewithin a single nation that is guaranteed by s 92 would be less than the freedomof trade between twelve separate nations that is guaranteed by Art 30 of the EECTreaty. This would indeed be remarkable.

The future may also see an interesting parallel development in the ECJ caselaw on Art 30 of the EEC Treaty. As described above, it presently appears thatany law of a member State which in any way leads actually or potentially to adecrease in imports from other member States will be inconsistent with Art 30unless it satisfies the rule of reason or falls within one of the exceptions underArt 36. In Torfaen Borough Council v B & Q plc1S2 Advocate General VanGerven argued that this view of the potential application of Art 30 was toobroad. He said that the result of this view is that

the Court will inevitably have to decide in an increasing number of cases on thereasonableness of policy decisions of member states taken in the innumerablespheres where there is no question of direct or indirect, factual or legaldiscrimination against, or detriment to, imported products.153

He argued that as a preliminary test of whether Art 30 was applicable at all to alaw of a member State, it was necessary to ask whether the effect of the law isthat "the Community market [is] partitioned into separate national markets".l54He suggested that a national rule which of itself "screens off'15S that memberState's market from the products of other member States will be automaticallysubject to the rule of reason, whether or not it gives any comparative advantageto domestic traders or products.lS6 However, he argued that a law which merely

150151

152153154155156

See also supra text at n 140.Suppose a State in which no margarine was produced enacted the law described supra n76 expressly for the purpose of encouraging the establishment of a local margarineindustry. Would the law be invalid under s 92 per se, or would it be valid until suchtime as a local industry did in fact establish itself!Supra n 115.Ibid para 26.Ibid para 21.Ibid paras 23-24.Thus the rule of reason in Art 30 would be applicable to any law of a member Statewhich prohibited or made more difficult the sale of a particular product (such as

348 Federal LawReview [VOLUME 19

increases the difficulty in penetrating a national market will not be subject to Art30 except where "it appears from the entire legal and economic context that theeconomic interweaving of national markets sought by the Treaty is therebythreatened"; that is, where the law renders the market so inaccessible "that itmust be feared that the majority of imported goods will disappear from themarket" .157

It is uncertain at this stage whether the ECJ will adopt a "partitioning themarket" requirement, or if it does, what its precise effect will be.l51 But if theECJ does apply such a requirement in future, and if the High Court's requirementof "protectionism" is qualified in the manner suggested above it is possible thatthe two could ultimately evolve along similar lines. For this reason, not onlywill subsequent developments in the application of Art 30 of the EEC Treatydeserve the attention of Australian constitutional lawyers, but future decisions ofthe High Court interpreting s 92 should be of considerable interest to EEClawyers.

6 CONCLUDING COMMENTS

This article has attempted to illustrate the usefulness of a comparative study ofEEC law for clarifying issues relevant to the interpretation of s 92. The studyhas been confined to the general question of the validity of State laws imposingburdens on the import of goods from interstate. There are other aspects to theoperation of s 92 which are still unsettled (such as State legislation establishing

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margarine packed in ropnd tubs, liqueurs with less than a specified alcohol content,crayfish under a certain size, or beer in non-refillable bottles), in so far as the lawapplied to goods imported from other member States. The law would "screen off' thedomestic market from the Community market in that product. It would be irrelevantthat the law gave no advantage to domestic producers of that product, or that therewere no domestic producers of the product.Ibid para 23. Thus a law which prohibited particular marketing techniques (such ascanvassing) would be subject to the Art 30 role of reason if it deprived traders fromother member States of an essential means of penetrating the local market, even ifdomestic traders were equally affected by the law. However, on this view Art 30 wouldnot apply to measures such as local planning laws restricting the establishment ofretail outlets in a member State. Such laws may have the effect of reducing the totalnumber of retail outlets in that country, and hence the total amount of retail sales,including sales of goods imported from other member States. However, such laws, ifapplied generally and without discrimination, do not make penetration of thedomestic market much more difficult for manufacturers of goods in other memberStates. Advocate General Van Gerven gave as other examples of such measures lawsregulating shopping hours, laws providing for the confiscation of goods for the nonpayment of taxes, and laws imposing speed limits (at para 26).In the Torfaen Borough Council case, the ECl declined to follow the AdvocateGeneral's view that Art 30 was inapplicable to the United Kingdom Shops Act 1950,which imposed bans on Sunday trading. However, this decision must be reconciledwith the judgment in the subsequent case Quietlynn Ltd v SOUlhend-on-Sea BoroughCouncil (Case C-23/89) [1990] 3 All ER 207, in which the Eel held the Art 30 roleof reason to be inapplicable to a United Kingdom law which required sex shops to belicensed by local councils. (Because Art 30 was considered inapplicable, it wasunnecessary in this case to consider the "public morality" exception in Art 36). Theprecise scope of Art 30 following these cases is the subject of some argument: seeW H Smith Do-iI-Ail Ltd v Peterborough City Council (QBD) [1990] 2 CMLR 577,599ff. Commentators predict that in future, the ECJ will formulate some test to limitthe potential application of Art 30.


compulsory acquisition or marketing schemes,lS9 or price-fixing schemes,l60 orwhich impose burdens on the local manufacture of goods intended for saleinterstate161). Nor has the question of the validity of Commonwealth legislationunder s 92 been settled.162 All these issues also have counterparts in EEClaw.l63 Nor are the possible comparisons limited to s 92.164 Given the tradingposition of the EEC today, some knowledge of EEC law is also of obviouspractical relevance to Australian practitioners in the area of international trade.For both these reasons, EEC law has attracted considerable interest outside theEEC itself, particularly in the United States)65 In Australia it has perhaps

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161

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Cole v Whitfield, supra n 3, 409: "... acquisition of a commodity may still involvethe potential for conflict with s 92. That problem does not now arise." Cf Field PeasMarketing Board (Tas) v ClemJ!nts and Marshall Pty Ltd (1948) 76 CLR 414; FishBoard v Paradiso (1956) 95 CLR 443.Eg W & A McArthur Ltd v Queensland (1920) 28 CLR 530; Wragg v New SouthWales (1953) 88 CLR 353Eg Buck v Bavone (1976) 135 CLR 110; Grannall v Marrickville Margarine Pty Ltd(1955) 93 CLR 55; Lachley Meats Pty Ltd v New South Wales Meat IndustryAuthority (1987) 92 FLR 48.Cole v Whitfield reaffinned that s 92 binds the Commonwealth, but the Court was"reluctant to attempt to express an exhaustive opinion upon that topic, even if itwere possible to do so" (at 398). It indicated though that a Commonwealth law wouldnot necessarily breach s 92 by virtue of the fact that its application was not uniformthroughout Australia.Price fixing: Tasca (Case 65n5) [1976] ECR 291, [1977] 2 CMLR 183; OpenbaarMinisterie (Public Prosecutor) v Van Tiggele (Case 82n7) [1978] ECR 25, [1978] 2CMLR 528; EC Commission v Italy (Re Fixing of Trading Margins) (Case 78/82)[1983] ECR 1955; Association des Centres Distributeurs Edouard Leclerc v "Au BleVert" Sari (Case 229/83) [1985] ECR 1, [1985] 2 CMLR 286. Laws burdeningexports: Jongeneel Kaas BV v Netherlands (Case 237/82) [1984] ECR 483, [1985] 2CMLR 53. Article 30 has been held applicable to the legislation of the EEC itself:Societe les Commissionnaires Reunis Sari v Receveur des Douanes (Joined cases 80and 81n7) [1978] ECR 927, 946-947, Halsbury's Laws of England, supra nil, Vol52, 126-127, para 12.92. See also EEC Treaty Art 37 (State monopolies of acommercial character).For instance, Art 12 of the EEC Treaty provides that "Member States shall refrainfrom introducing between themselves any new customs duties on imports or exportsor any charges having equivalent effect". This article, in conjunction with otherprovisions for the phasing out of existing customs duties, is similar to s 90 of theAustralian Constitution. In EC Commission v Belgium (Case 314/82) [1984] ECR1543, the ECJ considered whether a fee in respect of health inspections carried out onmeat at the time of importation was a fee for services to the importer, or a tax in thenature of a customs duty. Cf Harper v Victoria (1966) 114 CLR 361; Parton v MilkBoard (1949) 80 CLR 229 and (outside the context of s 90) Air CaledonieInternational v Commonwealth (1988) 165 CLR 462. Compare also EEC Treaty Arts92-94 (restrictions on State aids) with ss 90-91 of the Australian Constitution(restrictions on State aids and bounties).See eg the foreword by Justice Stewart of the United States Supreme Court toT Sandalow and E Stein (eds), Courts and Free Markets: Perspectives from the UnitedStates and Europe (1982) Vol I, vii: A "comparative study of [the US Constitutionand the EEC Treaty] ... can be a stimulating and enriching undertaking. For despitetheir great differences, there are important similarities in the goals and institutionalcharacteristics of the two systems."; H Smit and P Herzog (eds), The Law of the EEC:A Commentary on the EEC Treaty (1976) viii: "From its very beginning the EEC hasenjoyed a great deal of interest in the United States ... Articles in Americanperiodicals on European antitrust laws are almost as numerous as those that have


received less attention than it deserves. Articles on EEe law in Australianjournals are rare,l66 and this author is aware of no Australian law school whichoffers a course on it. Professors Zweigert and KOtz's suggestion that the study ofcomparative law "renews and refreshes the study of national law, which suffersfrom confining itself to the interpretation of positive rules and neglecting broadprinciples in favour of tiny points of doctrine"167 may not be the answer to allour problems. But with problems as difficult as the interpretation of s 92, it issurely of value.

POSTSCRIPT

Since this article was written, the High Court has given judgment in a furthers 92 case, this time concerning State legislation burdening the export of goodsfrom the legislating State: Barley Marketing Board (NSW) v Norman (1990) 96ALR 524, 65 AUR 49. In this case, New South Wales legislation provided thatupon any barley coming into existence within New South Wales it became theproperty of the Board, and that any contract for the sale of such barley not enteredinto or authorised by the Board was void. The Board was set up at the request ofand funded by New South Wales barley growers, and was intended to maximisetheir returns by giving small growers increased bargaining power against largepurchasers. The legislation was challenged under s 92 by New South Walesbarley growers who wished to sell directly to purchasers in Victoria. The HighCourt upheld the validity of the legislation, finding it neither discriminatory orprotectionist. It was not discriminatory because interstate and domesticpurchasers were given equal access to barley sold by the Board. It was notprotectionist because it did not prevent barley grown outside the State frombeing freely bought and sold in New South Wales and because the effect of thelegislation, which was to increase the returns of domestic growers, if anythingenhanced the competitive selling position of interstate growers (96 ALR at 535).The Court noted, however, that a State law would be contrary to s 92 if itspurpose was to benefit local manufacturers by preventing the export of a scarceor cheap local commodity to competing manufacturers in other States (at 536).

Once again, the approach of the High Court in this case is similar to thattaken by the EC] in applying the EEC Treaty. Article 34 of the EEC Treatyprohibits quantitative restrictions on exports to other member States and allmeasures having eqivalent effect. The EC] has consistently found that a law of amember State that applies to the production of a certain kind of goods withoutdistinguishing between goods intended for the domestic market and goodsintended for export will not be contrary to Art 34, unless the specific object or

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appeared in European publications.... [ECI decisions] have also been treatedfrequently and elaborately."But see eg L Zines, "The Balancing of Community and National Interests by theEuropean Court" (1973) 5 FL Rev 171 and D D Knoll, "From the Inside Looking Out:Comparing the External Capacities, Powers and Functions of the Commonwealth ofAustralia and the European Communities" (1985) 15 FL Rev 253.K Zweigert and H Kotz, An Introduction to Comparative Law (1977) Vol I, 3. Onedifficulty with comparative legal studies extending beyond the Anglo-Americansystem has always been the language barrier. One of the advantages of EEC law isthat it embodies legal traditions of numerous non-English speaking countries in awealth of primary material published in English.


effect of the law is to give an advantage to domestic production or trade at theexpense of the production or trade of another member State (Halsbury's Laws ofEngland, supra nil, Vol 52, 130-131, para 12.96). A law will not beinconsistent with Art 34 merely because it results in a competitive advantagebeing lost by domestic producers or traders (ibid, citing Holdijk (Joined cases141-143/81) [1982] ECR 1299, 1313-1314, [1983] 2 CMLR 635, 650-51;Jongeneel Kaas BV v Netherlands (Case 237/82) [1984] ECR 483, 505, [1985] 2CMLR 53,78-79).

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