Much of southern Tunisia bordering Libya has staged a general strike following deadly clashes between police and demonstrators after the seizure of contraband fuel, unions officials have said.

The officials said only emergency services, chemists and bakers were working on Tuesday in the Tatouine area, and that Ben Guerdane, near the Ras Jedir border post, was also paralysed, the AFP news agency reported.

Police in Ben Guerdane used tear gas to disperse stone-throwing protesters.

Much of southern Tunisia lives largely off illegal cross-border trade, with Libyan oil providing smugglers with a good living.

Unions are demanding job creation schemes, the lifting of an export tax imposed on goods imposed in October, the easing of border controls and an inquiry into "excessive use of force" by the police on Sunday.

One man died in the clashes with police at Dehiba, Tunisia's second-largest border crossing with Libya after Ras Jedir.

Late Monday, the government indicated the export tax was being reconsidered, and lamented "painful events" the previous day.

In December 2013, a World Bank report said cross-border smuggling with both Libya and Algeria in the west was costing the Tunisian exchequer at least $675m a year.

It is estimated that about 328,000 tonnes of contraband products pass through Ras Jedir annually, and that 20 percent of Ben Guerdane's economically active population lives off trafficking.

Closure of the southern frontier with violence-plagued Libya often sparks social upheaval.

Source: Agencies