By Robert Kozak

REUTER 19/3/1995

OTTAWA Canada and Europe's bitter dispute over fish stocks in the North Atlantic continued to simmer Sunday with Canadian officials voicing pessimism about an early resolution to the problem.

Talks between Canada and the European Union over Greenland halibut fishing have made some progress, "But there is still a long way to go," before a solution can be reached, Canada's Foreign Affairs Minister Andre Ouellet warned in a statement late Saturday.

Armed Canadian patrol boats chased down and seized a Spanish fishing trawler in international waters on March 9, setting off a angry dispute between the EU and Canada that threatened to turn into a deeper row.

Last week Canada released the seized Spanish fishing trawler, the Estai, after charges had been brought against the Spanish captain in St. John's, Newfoundland.

Spanish fishing vessels also stopped fishing in a disputed area of the Grand Banks fishing zone off Canada's east coast, which helped diffuse the explosive situation.

The dispute flared after an international fisheries management group, the Northwest Atlantic Fisheries Organisation (NAFO), awarded Canada a large quota for fishing for the Greenland halibut while giving the EU much less.

Efforts to resolve the fisheries dispute appeared to stall on Friday after Canada recalled its chief negotiators from preliminary talks in Brussels and a special NAFO meeting on the crisis was cancelled.

Senior Canadian officials on the negotiating team returned to Ottawa to consult with the government.

Foreign Affairs Minister Ouellet said late Saturday that the government wants to keep talking with the European diplomats.

He also dismissed reports that Canada was ready to give up part of its fishing quota in the disputed area, saying any negotiations on quotas must be tied to increased efforts to conserve the dwindling stocks.

"We are on record as saying we are preprared to discuss transitional arrangements on quotas," Ouellet said. "At the same time, the sharing of the resource cannot be settled until Canada is satisfied that adequate environmental and enforcement measures are to be put in place."

"As for the consideration of quotas, we are not there yet," he said.

Ouellet said that evidence discovered on the Estai, including undersized fish and illegal nets, emphasise the urgency of the situation.

Canadian officials expect to be in a position soon on whether to bring further charges of illegal fishing against the captain of the Estai. Enrique Davila Gonzalez, captain of the Estai, faces four charges of illegal fishing.