Estimating Informal Trade across Tunisia's Land Borders

This paper uses mirror statistics and research in the field
to estimate the magnitude of Tunisia’s informal trade
with Libya and Algeria. The aim is to assess the scale of
this trade and to evaluate the amount lost in taxes and
duties as a result as well as to assess the local impact in
terms of income generation. The main findings show that
within Tunisian trade as a whole, informal trade accounts
for only a small share (5 percent of total imports).
However, informal trade represents an important part
of the Tunisia’s bilateral trade with Libya and Algeria,
accounting for more than half the official trade with
Libya and more than total official trade with Algeria.
The main reasons behind this large-scale informal trade
are differences in the levels of subsidies on either side of the border as well as the varying tax regimes. Tackling
informal trade is not simply a question of stepping up
the number of controls and sanctions, because differences
in prices lead to informal trade (and to an increase in
corruption levels among border officials) even in cases
where the sanctions are severe. As local populations
depend on cross-border trade for income generation,
they worry about local authorities taking action against
cross-border trade. At the same time, customs officials are
concerned about the risk of local protests if they strictly
enforce the tariff regimes in place. This issue will become
even more significant if fuel prices in Tunisia rise again as
a result of a reduction in the levels of domestic subsidies.