Trade within the Commonwealth to be free.

92. On the imposition of uniform duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free389.

But notwithstanding anything in this Constitution, goods imported before the imposition of uniform duties of customs390 into any State, or into any Colony which, whilst the goods remain therein, becomes a State, shall, on thence passing into another State391 within two years after the imposition of such duties, be liable to any duty chargeable on the importation of such goods into the Commonwealth, less any duty paid in respect of the goods on their importation.

CANADA.—All articles of the growth, produce, or manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.— B.N.A. Act, 1867, sec. 121.

Where customs duties are, at the Union, leviable on any goods, wares, or merchandises in any two Provinces, those goods, wares, and merchandises may, from and after the Union, be imported from one of those Provinces into the other of them, on proof of payment of the customs duty leviable thereon in the Province of exportation, and on payment of such further amount (if any) of customs duty as is leviable thereon in the Province of importation.—Id. sec. 123.

HISTORICAL NOTE.—At the Sydney Convention, 1891, the first paragraph of the clause was drafted and passed substantially in its present form—except that it referred to trade “throughout the Commonwealth,” not merely “among the States.” There was also a clause enabling the Parliament to annul any law having the effect of derogating from inter-state free trade.

The difficulty as to the possible evasion of the federal tariff by “loading up” just before its imposition, in a colony where goods were duty-free, was raised by Colonel Smith, who proposed to retain the intercolonial duties for twelve months after the imposition of the Federal Tariff. The amendment was, however, withdrawn. (Conv. Deb., 1891, pp. 790–802.)

At the Adelaide session, 1897, the 1891 draft was followed almost verbatim. In place of the power to annul laws made in derogation of free-trade, there was appended to the preference clause a provision that such laws should be wholly void. Sir George Turner feared that “absolutely free” might have a wider interpretation than was meant; and Mr. Isaacs suggested that the clause was unnecessary, and dangerously wide. All that was needed was a prohibition of inter-state duties—which was elsewhere provided for. He also suggested “among the States” as better than the wide phrase “throughout the Commonwealth.” (Conv. Deb., Adel., pp. 875–7.)

For an amendment by Mr. Deakin, to enable a State to prohibit importation of articles the sale of which within the State is prohibited, see Hist. Note to sec. 113.

At the Melbourne session, a suggestion of the Legislative Assembly of Western Australia to omit “throughout the Commonwealth,” and substitute “between the States,” was agreed to.

The second paragraph was added in accordance with the Report of the Finance Committee. Mr. McMillan feared it would be unworkable; but Mr. Holder replied that it would probably not need to be enforced, as the mere fact of its existence would prevent the mischief. The provision was amended by inserting “colony or” before

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“State,” so as to make it applicable to goods imported before the establishment of the Commonwealth. Sir Philip Fysh proposed words to make it clear that these duties are to be credited to the State of destination; but the amendment was deemed unnecessary, and withdrawn. Sir George Turner suggested that where the duty paid in the colony was higher than the Commonwealth duty, the State should give a drawback; but the matter was left over for consideration. An amendment by Mr. Henry, to limit the clause to one year, was negatived by 32 to 9. The provision that laws derogating from free-trade should be void disappeared from the Bill, that result being sufficiently secured by this clause. (Conv. Deb., Melb., pp. 1014–36.) Drafting amendments were made before the first report and after the fourth report.