Driving SACU-Mercosur: Trans-atlantic co-operation in the automotive industry

This document starts by identifying sectors that can drive the SACU-Mercosur trade agreement. The current free trade agreement (FTA) proposals between the South African Customs Union (SACU) and Common Market of the South (Mercosur) are the result from an initiative aimed at linking developing countries in Latin America, Africa and Asia. However, there is little driving the initiative apart from politics. After a long process of negotiations, SACU and Mercosur are finally preparing to conclude a trade agreement. This report analysis the automotive industries of South Africa, Argentina and Brazil and investigates their strategies for sustainability in the global market. The analysis places the automotive industry in the context of the SACU-Mercosur FTA, considers the domestic and international objectives of the industry in Brazil, Argentina and South Africa, and the concerns affecting relations between competing automotive industries. It also suggests how to integrate this industry into the broader process of the FTA. The report concludes that automotive industry representatives in South Africa are reserved about an FTA with Mercosur. Markets in both Southern Africa and Mercosur are not growing rapidly, with limited scope for bilateral trade. A toned-down version of the agreement could help to address the concerns that hamper progress towards co-operation.