(Updates with release, changes dateline)

By Suzanne Perry

REUTER 15/3/1995

STRASBOURG, France Canada released on Wednesday the Spanish trawler it seized nearly a week ago in international waters, easing a bitter dispute with Europe over fishing rights, the European Commission said.

EU Fisheries Commissioner Emma Bonino told a news conference the boat, the Estai, had been freed and that it could leave Canada with all its catch as soon as the crew could board.

She said the move meant informal talks could begin between the European Union and Ottawa to prepare for a Northwest Atlantic Fisheries Organisation (NAFO) meeting starting on March 22 to discuss the dispute.

"I do believe this is the first step by which the Canadians are trying to be reasonable again," she said.

EU diplomats in Brussels said earlier that Canada had told the EU it was ready to release the Estai but was demanding the vessel's catch or a bond as a condition.

Bonino did not mention a bond, but Canadian Fisheries Minister Brian Tobin told reporters in Ottawa that one had been posted.

He also said fishing had stopped in the disputed area as part of the conditions for Estai's release.

"One (condition was) that there is no fishing on the...(Grand Banks) and that happens to be the case as we speak," he said.

An EU diplomat, speaking to Reuters in Brussels, said that Spain had told its partners at a meeting of EU ambassadors on Wednesday that Madrid would pull ships back from the disputed fishing area off Newfoundland after the trawler was released and serious negotiation with Canada had begun.

The Estai was seized on March 9 as its crew fished for Greenland halibut, or turbot, in international waters off the Grand Banks near Newfoundland.

Canada charges that European ships, mainly Spanish and Portuguese ones, are overfishing the area. It says the Estai was caught carrying immature fish, endangering the species' ability to sustain itself.

Throughout the week long dispute, both sides have pointed fingers accusingly at each other.

The Canadians accused the Spanish ship of environmental vandalism, while the EU said the seizure by Canada was an act of piracy.

Despite the release, Canada kept up the pressure against the EU throughout Wednesday, threatening to seize a second Spanish ship that was fishing in the region.

Bonino was also scathing about Canadian motivations in the dispute.

"It is unacceptable that the Union be made into a whipping boy...because the Canadians have not managed their resources properly," she told the European Parliament before the release, referring to the dramatic decline of fish stocks off Newfoundland.