Law and Regulations

US puts Alibaba' Taobao website back in its list of 'notorious marketplaces

Impact of Trump's tough talk on China stocks

Alibaba Group's massive consumer-to-consumer website, Taobao, has been put back in the United States Trade Representative (USTR) office's 2016 blacklist of "notorious marketplaces", a move the Chinese tech giant suggested could be influenced by politics.

Taobao was previously put on the USTR blacklist, which identifies companies known for the sale of counterfeit products and for violations of intellectual property rights, in 2011. It was removed from the list in 2012 after it made efforts to address concerns of intellectual property rights holders and committed to reduce the number of pirated and counterfeit goods on its website.

However, right holders in the U.S. and elsewhere "continue to report serious challenges to reducing high levels of counterfeit and pirated goods on Taobao," USTR's report noted.

Taobao joined 20 other websites on this year's USTR's Notorious Markets List, most of which offered streaming services.

Tens of millions of American jobs and several trillion dollars of our gross domestic product rely on American creative and innovative industries.
Michael Froman
United States Trade Representative

"The marketplaces, tactics, and schemes that undermine and threaten America's creative industries change quickly and require our constant attention. Our Notorious Markets List highlights key examples of online and physical markets all over the world that are linked to significant infringement of American businesses' intellectual property rights," he added.

The USTR acknowledged in its report while Alibaba has taken steps to counter the fakes which "set positive expectations for the future, current levels of reported counterfeiting and piracy are unacceptably high."

Right holders also reported difficulty in reporting intellectual property rights infringement, the office noted.

One large motor vehicle manufacturer reported that at least 95 percent of the merchandise bearing its company's brand names and trademarks found on Alibaba platforms is suspected to be counterfeit, the agency pointed out.

On China's massive Taobao marketplace, sellers can sell anything from cars to farm products.
Liu Xu | Xinhua | Getty Images

Alibaba president Michael Evans said the company was "very disappointed" by USTR's move that ignored "real work" the tech giant has done to counter fakes.

"In 2016 alone, we proactively removed more than double the number of infringing product listings than in 2015. It is therefore unreasonable for the USTR to have concluded that Alibaba is less effective in anti-counterfeiting than when it reviewed our efforts in 2015 and when it removed us from its list four years ago," he said in a statement.

Our results speak for themselves. Unfortunately, the USTR's decision leads us to question whether the USTR acted based on the actual facts or was influenced by the current political climate.
Michael Evans
Alibaba Group president

Inclusion on the blacklist does not carry any direct penalties but will hurt Alibaba's credibility.

Alibaba touts Taobao as China's largest online shopping destination by gross merchandise volume.

Alibaba shares fell 0.7 percent on the New York Stock Exchange to close at $89.25 on Wednesday.

Reuters contributed to this article.

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