This report describes the relationship between South Africa and the Mercado Commun del Sur (Mercosur). Currently, Mercosur is in a state of crisis, worsened by the Brazilian and Argentine crises, but it has substantial economic potential for South Africa. However, little has been achieved in terms of establishing an FTA.
South Africa should consider not only signing an FTA, but also the opportunities offered by each individual member country, and this report investigates the opportunities offered by Brazil, Argentina and Uruguay.
The approach of developing an FTA should probabably be toward a pragmatic ‘sector-by-sector’ agreement, focusing on less complicated and more viable industries, rather than an ‘all trade’ scenario. The alternative to an FTA with Mercosur is a free trade agreement with Chile.
It is concluded that whether an FTA is established with Mercosur or with Chile, negotiations should not be drawn-out or driven by politics. Combining speed and economic results will realise the commercial benefits of an agreement.
