Can a Protectionist Measure be Non-Discriminatory? Comparative Federal Markets and a Proposal for a Definition of Discrimination Under s 92 of the Australian Constitution
| Author | Csongor István Nagy |
| DOI | http://doi.org/10.1177/0067205X221146336 |
| Published date | 01 March 2023 |
| Date | 01 March 2023 |
Article
Federal Law Review
2023, Vol. 51(1) 58–77
© The Author(s) 2023
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DOI: 10.1177/0067205X221146336
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Can a Protectionist Measure be
Non-Discriminatory? Comparative
Federal Markets and a Proposal for a
Definition of Discrimination Under
s 92 of the Australian Constitution
Csongor Istv´
an Nagy*
Abstract
Three decades ago, in Cole v Whitfield, the High Court of Australia opted for a discrimination-b ased
standard with the argument that s 92 of the Australian Constitution targetssolely protectionist
measures. This article demonstrates, with the use of comparative law analysis, that, in contrast with
this teleology, the High Court has built a lacunose definition of discrimination that is incapable of
covering the whole spectrum of protectionist measures. It argues that measures having an
asymmetric impact should be considered discriminatory and countenanced only if they are justified
by a local legitimate end and are proportionate, even if they rely on distinctions that are not based
on out-of-state origin.
Received 22 June 2021
I Introduction
It is no exaggeration to say that the judgment of the High Court of Australia in Cole v Whitfield
1
represents a judicial paradigm-shift concerning the ‘trade and commerce’limb of s 92 of the
Australian Constitution (‘trade, commerce, and intercourse among the States …shall be absolutely
free’). The Court set out a ‘protectionist discrimination’standard, which limits the purview of s 92 to
‘discrimination’and exempts measures justified by a local legitimate end. This implies thatnon-
discriminatory measures are not caught in the net of s 92 and call for no justification, even if they
*Research Professor at the Centre for Social Sciences of the E¨
otv¨
os Lor´
and Research Network (Federal Markets
‘Momentum’Research Group), Professor of Law and Head of the Department of Private International Law at the
University of Szeged, recurrent Visiting Professor at the Central European University (Budapest/Vienna/New York) and the
Sapientia University of Transylvania (Romania). The author is indebted to Professor Amedeo Arena, Professor Samantha
Cheesman, Professor Helen Irving, Professor Andr´
as Jakab and Professor Giovanni Piccirilli for their comments. Of
course, all views and any errors remain the author’s own.
1. Cole v Whitfield (1988) 165 CLR 360.
restrict trade. Although, under this standard, the scope of free trade’s constitutional protection is
more limited than in most major federal markets, such as the European Union (‘EU’) and the United
States (‘US’), and it is even narrower than in international trade law (World Trade Organization
(‘WTO’)), after Cole v Whitfield, it was still uncertain how huge this divergence would be.
Discrimination may be defined in different ways and, despite the continued opacity of the High
Court’s subsequent case law, it made clear that it did not envisage giving the term a wide meaning.
Instead, the Court limited it to measures that are both asymmetric in effect and discriminatory in
nature. This creates a tension between the constitutional function of s 92, which is the suppression of
protectionist state measures, and its case law, which condones measures that are protectionist in
effect, but have no discriminatory nature. Protectionism is the conferral, directly or indirectly, of a
competitive advantage without being justified by a local legitimate end. This includes unequal
treatment (discrimination in the narrow sense) but also goes beyond that: measures that are not
discriminatory in the narrow sense may confer a competitive advantage on local businesses.
Unfortunately, while it is reasonable to expect s 92 to cover the full set of protectionist measures, the
High Court’s conception of discrimination is too narrow to fulfil this function and leaves out
measures which still have a protectionist effect.
2
This article demonstrates the above lacuna and, with the use of comparative law, showcases how
the judicial practice fails to fulfil its mission to rule out discrimination in the protectionist sense.
Foreign constitutional solutions have a somewhat limited use in terms of deep assessment of the
foundational principles of s 92, given that the answer should respond to the needs of Australian
federalism. Nonetheless, comparative law is a very useful tool to contextualize s 92 inlight of its
constitutional function, identify techniques and patterns, and to gather pre-existing experience. This
article proceeds from the High Court’s constitutional goal-setting. It does not question the con-
stitutional function the High Court attributes to s 92 but explores how this constitutional function
can be effectively carried out. The comparative analysis shows, with the use of EU
3
and US law, as
2.Cf Gonzalo Villalta Puig, ‘Betfair and Sportsbet: The Remains of theFederal Purpose of s 92 of the Australian Con-
stitution’(2013) 87(3) Australian Law Journal 178.
3.Whilethe EU is not a state proper, it displays numerous elements of a federal state, making comparisons highly lucrative,
especially as to the internal market. There is a wealth of literature emphasizing the EU’s state features: see, eg, Robert
Schütze, From Dual to Cooperative Federalism: The Changing Structure of European Law (Oxford University Press,
2009), 70 (‘[T]he American tradition easily classifies the European Union as a Federal Union. The Union has a mixed or
compound structure; and in combining international and national elements, it stands on federal “middle ground”.’). For
general theories of federalism and their application to the EU: see Christoph Sch ¨
onberger, ‘Die Europ¨
aische Union als
Bund: Zugleich ein Beitrag zur Verabschiedung des Staatenbund-Bundesstaat-Schemas’, (2004) 129(1) Archiv des
¨
offentlichen Rechts 81; Christoph Sch¨
onberger, Unionsbürger: Europas f¨
oderale Bürgerrecht in vergleichender Sicht
(Mohr Siebeck, 2005); Olivier Beaud, Th´eorie de la F´ed´eration (Presses Universitaires de Frances, 2007). For com-
parisons to federal states: see, eg, R Daniel Kelemen, The Rules of Federalism: Institutions and Regulatory Politics in the
EU and Beyond (Harvard University Press, 2004); Anand Menon and Martin Schain (eds), Comparative Federalism: the
European Union and the United States in Comparative Perspective (Oxford University Press, 2006); Michael Burgess,
Comparative Federalism: Theory and Practice (Routledge, 2006); Thomas O Hueglin and Alan Fenna, Comparative
Federalism: a Systematic Inquiry (University of Toronto Press, 2
nd
ed, 2015).
Nagy 59
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