Since independence, South Africa has engaged in various bilateral and regional free trade agreements (FTAs) in order to enhance exports diversification and stimulate aggregate growth of trade and productivity. This paper empirically investigates potential economic gains of South Africa (SA)- Australia FTA negotiations for policy use. It highlights the composition of trade, competitive advantage and strategic choice of the SA-Australia trade partnership and explores its full potential, using the newly developed endogenous gravity theory to study SA-Australia trade and its causal link with growth. The SA-Australia trade is shown to play a significant role in improving South-Africa’s growth while FDI  and trade services also appear to be important sources of South Africa’s economic performance.