Battle over a bottle.

• Author: French, Hilary F.
• Position: Canada's trade rules to protect the environment

Canadian beer fans, beware: The United States has slapped a $3-a-case tariff on all beer imported from the Canadian province of Ontario, the latest volley in a longstanding trade war between the two countries over access to each other's lucrative beer markets. Ontario has fired back, imposing equal import duties on the products of two U.S. beer companies, Heileman and Stroh.

Though it has many accoutrements of a classic trade tussle, the great North American beer war has some distinctly environmental overtones. At the heart of the feud is the question of how best to package beer in an ecologically friendly way. The recent U.S. tax on imported beer came in retaliation for Ontario's decision to double to 10 cents an environmental tax on non-refillable alcoholic beverage containers (usually aluminum beer cans) as well as for other measures that U.S. officials say are aimed at protecting Ontario's brewers, such as the imposition of minimum price requirements and warehousing fees for imports.

Around the world, national environmental laws are increasingly coming under fire for being "non-tariff barriers to trade." Among them: Germany's path-breaking packaging law, Austria's new law stipulating that timber from the tropical rain forests be labeled as such, and U.S. embargoes on tuna caught through fishing practices that endanger dolphins.

In the Ontario case, American brewers argue that the 10-cent non-refillables tax is a thinly disguised attempt to protect the province's beer industry, as most American beer is sold in cans. Canadian beer tends to be sold in refillable bottles. The U.S. Trade Representative estimates that the 10-cents-a-bottle levy combined with other new charges imposed by Ontario pushed the price tag for a case of American beer sold in Toronto from U.S. $19.83 to $24.35 - enough to discourage sales. The new levy looked particularly suspicious to U.S. trade officials because it came just days after the Canadian government had made a number of concessions on other matters in the long-standing dispute. These concerned Canada's pricing, listing, and distribution practices.

The Ontario government and many local environmental groups deny U.S. charges that the non-refillables tax is a protectionist move. It's a bonafide environmental measure, they say, designed to prevent the current high rate of bottle refilling from being undermined by the growing influx of canned U.S. beer. It will also raise revenue for the cash-strapped province...