**A number of conclusions can be drawn from this study. Although informal trade accounts for only a small proportion of Tunisia's total trade, it plays a significant role in bilateral trade with Libya and Algeria, and in certain sectors. While it accounts for more than half the country's trade with Libya, it is harder to estimate the level of informal trade with Algeria because it is more widespread and clandestine. However, it is possible to estimate that roughly 25% of the fuel**<sup>**8**</sup> **consumed in Tunisia is in the form of informal imports from 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.**<sup>**9**</sup> **For example, the price of fuel is around one-tenth in Algeria of that in Tunisia.**

**The growth in this type of trade has a significant impact on several areas of the Tunisian economy.** Fuel is cheaper, but government revenues are reduced, not only because goods are not subject to customs duties at the Tunisian border, but also because traders avoid paying value-added tax (VAT) provided they remain within the informal network. This loss of revenues can be significant.

**Moreover, this type of trade has an important economic and social impact in border regions. In many of these regions, informal trade is one of the most important economic activities—if not** **_the_ most important—as is the case, for example, in Ben Gardane.** Numerous individuals and organizations are involved in informal trade. While some are highly visible, such as transporters carrying the goods across the border, street vendors, and ad hoc traders (known informally as “ants”), others are less so, such as wholesalers, currency changers, and officials in the relevant administrations who are willing to turn a blind eye on the practice. This kind of trade also keeps many goods within budget for Tunisian consumers.

**Both the existing literature and the interviews conducted for the purpose of this study underline the pivotal role played by wholesalers** , who control the supply chain and distribution network and are best informed about possible commercial opportunities that may arise as a result of changes in customs duties or tax rates.

**It is worth noting that the** **_modus operandi_ differs according to whether trade takes place across the Libyan or Algerian border.** According to customs authorities and those interviewed, the vast majority of informal trade across the Libyan border takes place through the official border post. However, this is not the case with trade across the Algerian border, where the role of border posts is marginal (with less than 2% of the volume of goods traded informally going through it). A major contributing factor is that prices differ greatly between Tunisia and Algeria (by a factor of five for a packet of cigarettes or a bottle of strong liquor or by a factor of ten for fuel).

**Tackling informal trade is no longer simply a question of stepping up the number of controls and sanctions**<sup>**10**</sup> **because, as has been clearly shown in a number of countries, the sheer size of the**

> 8 This is based on data from STIR showing fuel imports of 2,790 million tons as against national fuel consumption of 3,746 million tons (source: www.stir.com.tn). We used an estimated weight of 0.792 tons per cubic meter of fuel (source: www.unitjuggler.com).

> 9 This confirms findings of ICG (2013).

> 10 Despite the fact that a new impetus has been given to crack down on informal trade (Leaders 2013).

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