By Timothy Puko and Alex Leary
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 7, 2019).
WASHINGTON -- The Trump administration is considering adding
some of Amazon.com Inc.'s overseas operations to a list of global
marketplaces known for counterfeit goods, in what would amount to a
public shaming of the e-commerce juggernaut, according to people
familiar with the matter..
The action would be taken by the U.S. Trade Representative's
Office, which publishes an annual list of "Notorious Markets" that
identifies online and physical marketplaces believed to sell or
facilitate the sale of counterfeit goods and pirated content.
A retail trade group has already called for including five
Amazon foreign platforms on the list, which is expected to be
released in coming weeks. Some Trump administration officials are
also advocating for some of Amazon's international operations to be
designated as notorious markets, the people familiar with the
matter said.
No decisions been made, and a similar push for Amazon's
inclusion last year failed, they said.
One of the people said advocates for including Amazon have cited
news reports in The Wall Street Journal and elsewhere showing that
as it has grown Amazon has become a larger source of counterfeit
products and dangerous items.
Third-party sales have become increasingly important to Amazon's
business and in 2018 comprised about 18% of Amazon's total
revenue.
The Notorious Markets list has been used as a tool to encourage
other countries to change their laws and foreign companies to
change their practices, which would make targeting a U.S. company
of Amazon's stature -- even one with overseas platforms -- a
watershed event.
"USTR is going to have to make a very strong case to put what
looks like an American company on this list," said Claire Reade,
senior counsel at Arnold Porter and former assistant U.S. trade
representative for China affairs. "Otherwise I think the risks to
USTR [and the list] are high, because then its credibility comes
into question."
One of the best-known companies currently on the Notorious
Markets list is the Taobao.com website owned by Chinese e-commerce
company Alibaba Group Holding Ltd., which has protested its
inclusion.
The American Apparel and Footwear Association, or AAFA, has
formally requested that U.S. trade office add Amazon sales
platforms in the U.K., Canada, Germany, India and France to the
Notorious Markets list. The association said its members flagged
those sites as the biggest source of problems among Amazon sites
with thousands of counterfeit items and listings.
"AAFA members continue to report that it is a constant struggle
to maintain a clean marketplace on Amazon platforms and that Amazon
does little to vet sellers on its platform," the group said in a
Sept. 30 letter to the USTR. The group didn't immediately return
calls for comment.
Amazon responded to the apparel and footwear association's
contentions, saying in a filing with the USTR that it invested $400
million in 2018 alone for personnel to fight fraud and abuse. The
company outlined various other actions, including offering free
brand registration and help for emerging brands to obtain trademark
and intellectual property protection.
In a statement to the Journal, Amazon said that it "strictly
prohibits counterfeit products in our store and we invest heavily
to protect our store, customers, and brands and as a result, more
than 99.9% of page views by our customers did not receive a notice
of potential counterfeit infringement."
A USTR spokesman didn't answer requests for comment.
The Notorious Markets list names and shames companies and
countries that allegedly don't take steps to stop counterfeiters.
It doesn't set official U.S. policy, but its prominence can be a
public-relations problem for companies on the list and bring
significant pressure to Washington's international negotiations and
interactions with them and their home countries.
Putting Amazon on the list would be the latest flashpoint
between the administration and the online retailer led by founder
and chief executive Jeff Bezos, a frequent target of President
Trump.
Mr. Trump blames Mr. Bezos for unfavorable coverage in the
Washington Post, which Mr. Bezos bought in 2013 for $250 million.
The Post says its editorial decisions are independent.
More recently, Mr. Trump called for an investigation of a
massive cloud-computing contract for the U.S. military that was
considered likely to go to Amazon but ultimately went to rival
Microsoft Corp. The contract award is now under protest by
Amazon.
The White House declined comment.
The administration sees piracy as a rising concern for consumers
and is looking for ways to improve and expand its enforcement
against counterfeit goods in the growing e-commerce
marketplace.
In April Mr. Trump signed a memorandum on "Combating Trafficking
in Counterfeit and Pirated Goods," saying they are a risk to public
health and safety and pushing the government to find new ways of
coordinating efforts to stop them.
"This president has decided that it's time to clean up this wild
west of counterfeiting and trafficking," Peter Navarro, director of
the Office of Trade and Manufacturing Policy, said at the time.
The concern about e-commerce stretches back to before Mr.
Trump's tenure, too. In 2016, the Obama administration returned
Alibaba Group to the list, citing complaints about obstacles to
removing counterfeit items from the site's flea-market-like Taobao
shopping platform.
Recent Wall Street Journal investigations have shown Amazon
sites have evolved like a flea market, too, littered with products
declared unsafe or banned by federal agencies.
The company exercises limited oversight over items listed by
millions of third-party sellers, many of them anonymous, many in
China, some offering scant information.
Write to Timothy Puko at tim.puko@wsj.com and Alex Leary at
alex.leary@wsj.com
(END) Dow Jones Newswires
December 07, 2019 02:47 ET (07:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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