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Counterfeiting is not new to the Alibaba Group's e-commerce platforms, including Taobao and AliExpress. Yet it has reached "crisis levels" and "epidemic" proportions, according to a letter from North American, European, and Asian trade groups to the Office of the U.S. Trade Representative (USTR), which issues a list of "Notorious Markets" each year. Signatories include over a dozen business and trade groups, including the AFL-CIO, the American Apparel & Footwear Association, the Council of Fashion Designers of America, and the Federation of the Swiss Watch Industry FH.

The letter (available to download) expresses justifiable concern that counterfeiting accounts for over 2.5% of U.S. imports. Furthermore, in purchasing counterfeit products, U.S. consumers unwittingly expose themselves to unknown health and safety risks. The letter notes that Alibaba has not implemented USTR recommendations designed to curb counterfeiting. For example, it has not simplified procedures for rights holders to register and request enforcement action; nor has it done enough to punish counterfeiters and prevent recidivism.

For its part, Alibaba reports that it took down over 380 million product listings and has closed over 180,000 Taobao stores selling counterfeits. It also plans to become stricter with repeat infringers starting in January. It prohibits product listings that intentionally blur trade marks in product photographs, a major red flag. But many groups ask if this is enough—especially because the platforms generate billions in sales, and Alibaba's "Singles Day" eclipsed "Cyber Monday" as the busiest, most profitable day for online shopping.

The trade groups ask the USTR to relabel Alibaba platforms as "notorious markets" for counterfeiting. The Notorious Markets List identifies online and physical marketplaces known to "engage in or facilitate substantial copyright piracy and trademark counterfeiting," and is sometimes referred to as a counterfeiting blacklist. Taobao appeared on the list in 2008, but was removed in 2012. The trade groups want the platforms back on the list to keep pressure on them to crack down on counterfeiting. Until that happens, the trade groups will continue to be concerned.