Leading article: A price worth paying for a free market

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IF TONY Blair really believed in grown-up, joined-up politics - those clever, patronising coinages of his - he should tell his friend Gerhard Schroder, the new German Chancellor, that he will give up Britain's EU rebate. He won't, of course, because the annual pounds 2bn refund, won by Margaret Thatcher's handbag diplomacy, is a great symbol of national truculence. It is also highly symbolic of the way British public opinion treats the European Union like a shop: "We bought this pig in a poke in 1975, it said on the label it would make us as rich as Germans overnight, and it hasn't: we want our money back."

If the Prime Minister wants to encourage a more mature attitude to what should be more like a workplace - a collective enterprise in which we do not simply ask what Europe can do for us but what we can do for Europe - he should explain that the only reason we need the rebate is because EU farm policy makes our food so expensive.

Then we could all move on to the argument which really matters: how to dismantle the Common Agricultural Policy (CAP). As we report today, the Germans, who are currently minding the shop (or workplace) as holders of the rotating presidency, have tabled some tough proposals to get EU spending under control. In Britain, it is hard to realise how much this issue dominates the German press. Germany pays in to EU funds far more than even its wealth justifies, and the German taxpayer is getting restless.

EU subsidy is already being switched from buying up food at guaranteed prices to direct handouts to farmers, and the Germans want to speed this up while freezing the EU budget at its current level. That would mean a free(ish) market in food at world prices by 2006. If that happened, British taxpayers would benefit from cheaper food and could afford to chip in more to the Brussels kitty.

If Mr Blair indicated a willingness to link the British rebate to CAP reform, he could win friends in Bonn and undermine people in Paris. The French hypocrisy in pretending to support enlargement of the EU to the east would be exposed, because that simply cannot happen while open-ended farm subsidies are on offer. For too long, Europe's leaders have been allowed to pay lip service to the idea of a wider Europe while focusing all their efforts on the launch of the euro. Now that the euro is real, however, it can be seen as a force pulling the whole of Europe together, rather than simply as a fence around the middle.

But, as Europe expands, the burden on the richer member states will shift from supporting inefficient French farms to reconstructing inefficient Polish factories. Mr Blair needs to start putting the case now for learning from the mistakes of the CAP, so that billions are not wasted in subsidy and that the burden is fairly shared. Eventually the British rebate will have to go: now is the time to start thinking of a fair way of replacing it.