Contrary to what many commentators are suggesting, Labour is not in the dominant position on what happens regarding the proposed free trade agreement with India. Labour is actually over a barrel on the issue.

Thanks to New Zealand First's obdurate xenophobia, based on inaccurate claims about what the agreement means for future immigration levels from India, the government lacks the numbers in Parliament to pass the relevant enabling legislation. Without New Zealand First's support, National and ACT therefore need to bring on board either Labour, the Green Party or Te Pati Māori to get the legislation through.

Neither the Greens nor Te Pati Māori are realistic prospects, given their antediluvian approach to trade and business. So, it comes down to Labour whether the legislation can pass, and the free trade agreement proceed.

But, contrary to what might be expected, that does not leave Labour in a very strong position. After all, over the last twenty years it has been Labour-led governments that have been more active in pursuing free trade agreements. Most notably, the free trade agreements with China (now our largest trading partner), and the European Union, among others, were reached during the terms of previous Labour-led governments. A free trade agreement with India eluded the last Labour government, even though it had been in its sights, although it was not for lack of New Zealand effort.

All of which makes it very difficult for Labour to do anything other than support the current agreement. Early indications were that would be the case, but now, in what amounts to no more than shadowboxing, Chris Hipkins is trying to raise doubts about whether it will support the enabling legislation.

He probably has a legitimate point that National should have consulted Labour earlier about the deal, but for partisan political reasons, that was never going to happen. Getting a free trade deal during this term of Parliament was an oft stated personal ambition of Prime Minister Luxon from election night (which may explain New Zealand First's opposition) and National was never going to let anything detract from his personal glory in achieving it.

Nevertheless, the temptation for Labour to rain on his parade by denying him the numbers to get the legislation is strong and understandable. But deep-down Labour knows that bloodying Luxon's nose this way, no matter how tempting, could ultimately prove extremely counter-productive to the national interest, especially if it means the deal does not proceed.

If the free trade agreement with India falls over because the government cannot get the support necessary to pass the enabling legislation it will be extremely embarrassing for both countries. New Zealand has spent much time over the last decade under both governments trying to persuade an often-reluctant India to complete a free trade deal. If the deal fails at this point, India is likely to be wary of trying to resurrect a deal too hurriedly, especially since New Zealand stands to benefit more from free trade than India. And if that occurs because Labour fails to support the legislation, India will be even more wary of talking to a future Labour-led government about free trade.

Moreover, Labour has a substantial Indian voter base in New Zealand. Those voters are unlikely to view favourably Labour failing to support the free trade agreement, especially given its provisions about improved immigration opportunities. 

So, for a variety of national interest and partisan political reasons, Labour really has no option but to support both the free trade deal and the enabling legislation. National knows this and it is why it has Labour over a barrel. Labour credibly has no option than to offer its albeit grudging support to the government.

But how long that takes to be forthcoming is less certain. Realising it must ultimately support the legislation, Labour's only remaining card is to drag out the confirmation of its approval for as long as it can to keep the Prime Minister on tenterhooks for as long as possible. However, it needs to be careful not to overplay its diminishing hand. The longer it delays agreeing to support the agreement, the more its credibility will weaken.

There is too much riding on this free trade deal to risk its being derailed by short-term political games. For the country’s sake, let alone its own Integrity, Labour cannot afford to cause this to happen.