E-commerce companies need to do a better job of regulating counterfeit items across their platforms because the "phase one" U.S.-China trade deal includes tough intellectual property protections, Peter Navarro told CNBC on Thursday.
"The Amazons and the Alibabas, Shopify, they have been facilitators of the Chinese counterfeiting. So, if we're going to enforce this deal, it's going to be a big part of that is scrutinizing this," the White House trade advisor warned.
U.S. and Chinese officials on Wednesday signed their first-step trade agreement, which includes calls for both sides to work to "combat the prevalence of counterfeit or pirated goods" by taking "effective action" when online platforms fail to prevent intellectual property infringement.
China agreed to consider revoking operating licenses if e-commerce platforms repeatedly sell counterfeit goods. The U.S. agreed to discuss further measures to combat online sales of counterfeit goods.
"We don't love regulations in this administration, but what we do love is corporations accepting their appropriate responsibility," Navarro said in Thursday's "Squawk Box" interview. "Right now it's skewed. If you're an intellectual property rights holder, whether you're Michael Kors or Louis Vuitton or Pfizer selling prescription drugs, the onus is really on your company to police the internet, where a lot of this counterfeiting occurs. That's not right."
Both Amazon and Walmart responded to Navarro's comments and cited their efforts to reduce the availability of fake goods.
"Our efforts have ensured that over 99% of the products our customers view on Amazon never receive a complaint about counterfeits. We've spent more $400M in 2018 alone to protect our store and created innovative and effective tools," a company spokesperson said.
Shopify was not immediately available to respond to Navarro's remarks.
The Trump administration has in the past voiced concern over fake items sold in online marketplaces. In April, President Donald Trump ordered a crackdown on counterfeit items on e-commerce sites, saying the value of global trade in pirated and counterfeit goods is half a trillion dollars per year. At the time, Trump warned the companies that if they failed to clean it up, "the government will."
Amazon specifically has faced increased criticism over the amount of counterfeit goods on its platform despite its "zero tolerance" policy for the products. A few weeks ago, Amazon said it will ramp up counterfeit reporting to authorities to further crackdown on the fake items.
"I've told Amazon, I've told eBay, I've told all these platforms we had here at the White House, it's like, look, this is harming your consumers. It's harming your business model. You're making a bunch of money off these folks selling this counterfeit stuff, but you're not accepting your full responsibility," Navarro said.