Attache George Pope said the overarching question was whether the EU would abandon its preference for controlling internal prices and supplies by use of export taxes and subsidies, depending on whether crops were small or large.
"Until they address that, the rest of this is irrelevant as to whether it's market-oriented or not," Pope said in an interview after perusing a summary of the Santer plan.
European Commission president Jacques Santer unveiled details of the Agenda 2000 package earlier in the day before the European Parliament. Ag reforms would accompany EU expansion into eastern Europe early next decade.
Santer said grain supports would be reduced by 20 percent. Half of the lost aid would be made up in the form of direct payments to farmers. Dairy supports would be cut 10 percent and beef supports by 30 percent with direct payments to offset the reductions.
Mandatory idling of land would be scrapped if the reforms were adopted, Santer said.
"This is the first round of proposals," Pope said of the plan, which would be mulled by farmer and EU member nations during the traditional August holidays.
Use of direct payments could be a step toward free-market policies, Pope said in an interview with Reuters. But, he indicated that EU imposition of export taxes on grain during the past year showed the EU clung to supply controls.
A critical issue in coming weeks, he said, would be if the EU decided to use export subsidies for an expected large grain crop, forecast to include 98.55 million tonnes of wheat.
"If they go back into export subsidies, that will trigger a response here of some sort," Pope said.
U.S. officials have warned they would get back in the export-subsidy business if competitors act unfairly.
Pope said European resistance to genetically engineered crops semed to be fading. As well, demands for separate handling of biotech crops seemed to be moving toward a consensus, by default of regulatory action, to let consumers decide what to buy on the basis of labeling on food products.
It was unclear how the EU would act if, as now expected, the World Trade Organization formally rules it cannot ban imports of beef raised with aid of artificial stimulants.
"How they react to it will be very interesting," Pope said.
EU officials also must decide whether to carry out a recent agreement with the United States over meat inspection rules. The spat briefly interrupted transatlantic meat trade.
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