Prime Minister John Key has labelled Labour's demand that New Zealand maintain the right to ban foreign buyers under the Trans-Pacific Partnership "crazy" and "schizophrenic".
Labour leader Andrew Little has said his party supports free trade but would not back the TPP unless "non-negotiable bottom lines" were met.
One of them is that New Zealand maintains the right to restrict sales of farm land and housing to non-resident foreigner buyers.
"The slightly crazy thing and slightly schizophrenic position that Labour now have is if they felt so strongly about that why on earth did they write the MFN [Most Favoured Nation] provisions into the 2008 China FTA," Mr Key told his post-Cabinet news conference today.
It's just barking madness- Prime Minister John key
"The point is up until they had massive divisions within their own caucus they were totally supportive of the TPP from what I could see. And actually they weren't trying to apply a ban to foreigners."
Mr Key says house prices doubled under Labour in the nine years Helen Clark was prime minister "and they didn't for one minute think about banning foreigners form buying.
"And they wrote, under exactly those conditions after the house prices had doubled, a Most Favoured Nation status clause which gave China the benefit of any other provisions that other governments had.
"So their position's changed. And their position hasn't changed because they don't want to do a Free Trade Agreement with the United States."
Mr Key said: "I mean are you really telling me Phil Goff, who seems to have dedicated his career to trade and to opening up trade, along with Clayton Cosgrove and a lot of others really believe it's in New Zealand's interests not to sign a Free Trade Agreement with the biggest economy in the world and the fourth biggest economy in the world? It's just barking madness."