By Michael Tutton

HALIFAX (CP) – Senior bureaucrats from Nova Scotia went public Monday with their latest offer in a frosty standoff over beer trade between their province and neighbouring New Brunswick.

Vicki Harnish, the province’s deputy minister of finance, said during a briefing that the Nova Scotia Liquor Corp. would consider dropping the $1.32 per 12-pack handling fee it had planned to charge Molson (TSX:TPX.B) for beer produced at a new plant in Moncton, N.B., and sold in Nova Scotia.

In return, she said Nova Scotia wants New Brunswick to offer to lower its distribution fees – which range between $2.40 to $2.60 per 12-pack – for mid-sized breweries in Nova Scotia that ship to New Brunswick.

Harnish noted that demand is largely on behalf of Sleeman Breweries (TSX:ALE), which has a brewery in Dartmouth, N.S.

“What we do need is a reply with some sort of counter-offer or initiative that would make the playing field more level for our Nova Scotia breweries who want to send our product into New Brunswick,” she said.

The province is eager to make a deal after 14 months of stalemated talks, she added.

However, New Brunswick‘s Liberal Premier Shawn Graham, and Nova Scotia‘s Tory Premier Rodney MacDonald, haven’t been sounding agreeable.

Last week, Graham suggested Nova Scotia might end up being sued by Molson, and referred to MacDonald’s stance as being “territorial.”

MacDonald countered he wouldn’t “sell the farm” to accommodate his neighbouring province.

New Brunswick and Molson argue the company should be covered under an unwritten 1993 deal made between former New Brunswick premier Frank McKenna and former Nova Scotia premier Don Cameron.

That deal allowed Moosehead, based in Saint John, N.B., and Labatt, which owned Oland Breweries in Halifax, to sell their beer without paying fees in either province.

Nova Scotia counters that Molson wasn’t part of the deal and it shouldn’t automatically be included.

There’s been speculation the Nova Scotian economic officials are exacting revenge over Molson’s 2004 decision to locate its factory in Moncton, rather than in Amherst, N.S.

However, for observers who favour free trade, the dispute is simply the latest example of politics trumping the economy in Atlantic Canada.

“The premiers should stop drinking beer and start selling it,” said Charles Cirtwill, acting president of the Atlantic Institute for Market Studies, a right-leaning think tank.

“This is a demonstration of just how serious these guys are about removing trade barriers: not that serious at all.”

Molson has said the timing is critical as it prepares to distribute its products across the Maritimes.

Ferg Devins, the vice-president of public affairs at Molson Canada, said in an interview that he’s hoping a solution is in sight, despite the heated words.

“Molson is confident that New Brunswick and Nova Scotia will resolve this matter, and that Molson will be treated as equally and fairly as other brewers that have decided to invest in this region,” he said.

Neither premier was available for comment.

Gisele Regimbal, a spokeswoman for intergovernmental affairs in New Brunswick, said her department is pleased that it received a written offer from Nova Scotia last Friday night.

The offer also includes proposals to reduce fees for the micro-breweries based in both provinces.

“Negotiations are going well, and we’d rather have them happen between the two parties until such time as we can come out and say what the resolution is,” she said.