Border trade
Encyclopedia
Border trade, in general, refers to the flow of goods and services across the
international borders between jurisdictions. In this sense, it is a part of normal legal trade
that flows through standard export/import frameworks of nations. However border trade specifically refers to the increase in trade in areas where crossing borders is relatively easy and where products are significantly cheaper in one place than another, often because of significant variations in taxation levels on goods such as alcohol
and tobacco
.
As well as border trade across land or sea borders, air travel with a low-cost carrier
can be worthwhile for a short international trip to the same purpose, although baggage restrictions can limit worthwhile savings to those for small high-value goods.
Where border trade is done for tax evasion
it forms part of the underground economy
of both jurisdictions.
and Russia
, between Norway
and Denmark
/Sweden
/Finland
/Russia
, and between Denmark
and Germany
.
Border trading exists between Northern Ireland
and the Republic of Ireland
, with petrol being cheaper in latter and groceries, furniture and clothing cheaper in the former. Between the United Kingdom
and France
/Belgium
, the booze cruise
is a trip made specifically, or at least largely, to purchase cheaper alcohol and tobacco, and also goods offering different rates of VAT: laundry detergent
, perhaps surprisingly, is a common purchase.
Croatia
ns who live close to the border with Bosnia and Herzegovina
or Serbia
often purchase tobacco and other goods on the other side of the border.
, USA, Mexico
) is robust. The North American Free Trade Agreement
(NAFTA) has reduced barriers and tariffs, facilitating cross-border trade. Each day 2008, $2 billion of cross-border trade was conducted between Canada and USA alone. Consumers take part in cross-border trading in order to broaden their product selection, gain access to a larger market place, or to take advantage of currency volatility. On-line commerce has taken a more prominent role in recent years and gives consumers a convenient platform for cross-border shopping. However, additional border costs such as duties, brokerage and shipping are not always disclosed up front or even known by the retailer, leading to situation where the final cost of the item can greatly exceed expectations. Dedicated cross-border shopping solutions such as Wishabi
, and Canada Post’s Borderfree exist to mitigate these problem with varied success. In the end, caution is necessary to determine the final cost of goods before purchase.
ans also travel to Johor Bahru
in Malaysia or Batam
in Indonesia
, to take advantage of price differences and differing product availability. The Singaporean government has a law that requires a car leaving Singapore to have a fuel tank that is mostly full, to prevent it from being filled with fuel from outside Singapore.
Shenzhen
, China
, on the border with Hong Kong
, also benefits significantly from border trade.
international borders between jurisdictions. In this sense, it is a part of normal legal trade
that flows through standard export/import frameworks of nations. However border trade specifically refers to the increase in trade in areas where crossing borders is relatively easy and where products are significantly cheaper in one place than another, often because of significant variations in taxation levels on goods such as alcohol
Alcohol
In chemistry, an alcohol is an organic compound in which the hydroxy functional group is bound to a carbon atom. In particular, this carbon center should be saturated, having single bonds to three other atoms....
and tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
.
As well as border trade across land or sea borders, air travel with a low-cost carrier
Low-cost carrier
A low-cost carrier or low-cost airline is an airline that generally has lower fares and fewer comforts...
can be worthwhile for a short international trip to the same purpose, although baggage restrictions can limit worthwhile savings to those for small high-value goods.
Where border trade is done for tax evasion
Tax avoidance and tax evasion
Tax noncompliance describes a range of activities that are unfavorable to a state's tax system. These include tax avoidance, which refers to reducing taxes by legal means, and tax evasion which refers to the criminal non-payment of tax liabilities....
it forms part of the underground economy
Underground economy
A black market or underground economy is a market in goods or services which operates outside the formal one supported by established state power. Typically the totality of such activity is referred to with the definite article as a complement to the official economies, by market for such goods and...
of both jurisdictions.
Europe
Typical examples of this are the borders between UkraineUkraine
Ukraine is a country in Eastern Europe. It has an area of 603,628 km², making it the second largest contiguous country on the European continent, after Russia...
and Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
, between Norway
Norway
Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...
and Denmark
Denmark
Denmark is a Scandinavian country in Northern Europe. The countries of Denmark and Greenland, as well as the Faroe Islands, constitute the Kingdom of Denmark . It is the southernmost of the Nordic countries, southwest of Sweden and south of Norway, and bordered to the south by Germany. Denmark...
/Sweden
Sweden
Sweden , officially the Kingdom of Sweden , is a Nordic country on the Scandinavian Peninsula in Northern Europe. Sweden borders with Norway and Finland and is connected to Denmark by a bridge-tunnel across the Öresund....
/Finland
Finland
Finland , officially the Republic of Finland, is a Nordic country situated in the Fennoscandian region of Northern Europe. It is bordered by Sweden in the west, Norway in the north and Russia in the east, while Estonia lies to its south across the Gulf of Finland.Around 5.4 million people reside...
/Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
, and between Denmark
Denmark
Denmark is a Scandinavian country in Northern Europe. The countries of Denmark and Greenland, as well as the Faroe Islands, constitute the Kingdom of Denmark . It is the southernmost of the Nordic countries, southwest of Sweden and south of Norway, and bordered to the south by Germany. Denmark...
and Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
.
Border trading exists between Northern Ireland
Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...
and the Republic of Ireland
Republic of Ireland
Ireland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...
, with petrol being cheaper in latter and groceries, furniture and clothing cheaper in the former. Between the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
and France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
/Belgium
Belgium
Belgium , officially the Kingdom of Belgium, is a federal state in Western Europe. It is a founding member of the European Union and hosts the EU's headquarters, and those of several other major international organisations such as NATO.Belgium is also a member of, or affiliated to, many...
, the booze cruise
Booze cruise
Booze cruise is a British colloquial term for a brief trip from Britain to France or Belgium with the intent of taking advantage of lower prices, and buying personal supplies of alcohol or tobacco in bulk quantities...
is a trip made specifically, or at least largely, to purchase cheaper alcohol and tobacco, and also goods offering different rates of VAT: laundry detergent
Laundry detergent
Laundry detergent, or washing powder, is a substance that is a type of detergent that is added for cleaning laundry. In common usage, "detergent" refers to mixtures of chemical compounds including alkylbenzenesulfonates, which are similar to soap but are less affected by "hard water." In most...
, perhaps surprisingly, is a common purchase.
Croatia
Croatia
Croatia , officially the Republic of Croatia , is a unitary democratic parliamentary republic in Europe at the crossroads of the Mitteleuropa, the Balkans, and the Mediterranean. Its capital and largest city is Zagreb. The country is divided into 20 counties and the city of Zagreb. Croatia covers ...
ns who live close to the border with Bosnia and Herzegovina
Bosnia and Herzegovina
Bosnia and Herzegovina , sometimes called Bosnia-Herzegovina or simply Bosnia, is a country in Southern Europe, on the Balkan Peninsula. Bordered by Croatia to the north, west and south, Serbia to the east, and Montenegro to the southeast, Bosnia and Herzegovina is almost landlocked, except for the...
or Serbia
Serbia
Serbia , officially the Republic of Serbia , is a landlocked country located at the crossroads of Central and Southeast Europe, covering the southern part of the Carpathian basin and the central part of the Balkans...
often purchase tobacco and other goods on the other side of the border.
North America
Cross-border shopping between the three countries in North America (CanadaCanada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, USA, Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
) is robust. The North American Free Trade Agreement
North American Free Trade Agreement
The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada – United States Free Trade Agreement...
(NAFTA) has reduced barriers and tariffs, facilitating cross-border trade. Each day 2008, $2 billion of cross-border trade was conducted between Canada and USA alone. Consumers take part in cross-border trading in order to broaden their product selection, gain access to a larger market place, or to take advantage of currency volatility. On-line commerce has taken a more prominent role in recent years and gives consumers a convenient platform for cross-border shopping. However, additional border costs such as duties, brokerage and shipping are not always disclosed up front or even known by the retailer, leading to situation where the final cost of the item can greatly exceed expectations. Dedicated cross-border shopping solutions such as Wishabi
Wishabi
Wishabi is a Canadian online shopping platform that is owned and maintained by the Wishabi corporation. Wishabi's mission is "to give Canadians the best tools to make informed shopping decisions"....
, and Canada Post’s Borderfree exist to mitigate these problem with varied success. In the end, caution is necessary to determine the final cost of goods before purchase.
East Asia
Many SingaporeSingapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
ans also travel to Johor Bahru
Johor Bahru
Johor Bahru is the capital city of Johor in southern Malaysia. Johor Bahru is the southernmost city of the Eurasian mainland...
in Malaysia or Batam
Batam
Batam is an island and city in Riau Islands Province of Indonesia, known for its free trade zone area as part of the Sijori Growth Triangle, is located off Singapore's south coast...
in Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
, to take advantage of price differences and differing product availability. The Singaporean government has a law that requires a car leaving Singapore to have a fuel tank that is mostly full, to prevent it from being filled with fuel from outside Singapore.
Shenzhen
Shenzhen
Shenzhen is a major city in the south of Southern China's Guangdong Province, situated immediately north of Hong Kong. The area became China's first—and one of the most successful—Special Economic Zones...
, China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
, on the border with Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
, also benefits significantly from border trade.