S.1358 - Transaction and Sourcing Knowledge Act; TASK Act (119th Congress)
Summary
S.1358, the TASK Act, mandates the Securities and Exchange Commission (SEC) to require companies to report on their supply chain sourcing and due diligence activities related to products imported from Xinjiang, China, particularly those linked to forced labor. It also requires reporting on transactions with entities on the Department of Commerce's Entity List or designated as Chinese Military-Industrial Complex Companies by the Department of the Treasury. Additionally, US companies with facilities in China must report on the presence and activities of Chinese Communist Party committees within their operations.
The bill aims to increase transparency and accountability regarding forced labor and potential national security risks in supply chains. This is achieved through enhanced reporting requirements for publicly traded companies.
The bill was introduced in the Senate on April 8, 2025, and referred to the Committee on Banking, Housing, and Urban Affairs.
Expected Effects
The TASK Act, if enacted, would compel publicly traded companies to disclose information about their supply chains and relationships with entities linked to forced labor and the Chinese military. This increased transparency could lead to companies re-evaluating their sourcing and business practices.
It may also lead to divestment from companies implicated in human rights abuses or posing national security risks. The SEC would be responsible for creating and enforcing these new reporting requirements.
Potential Benefits
- Reduced Complicity in Forced Labor: By requiring companies to report on their supply chains, the bill aims to reduce the demand for goods produced with forced labor in Xinjiang.
- Increased Transparency: The reporting requirements would provide investors and consumers with more information about the ethical and security risks associated with certain companies.
- Enhanced National Security: Reporting on transactions with entities on the Entity List and Chinese Military-Industrial Complex Companies could help to identify and mitigate national security risks.
- Improved Corporate Accountability: The bill would hold companies accountable for their sourcing practices and relationships with potentially problematic entities.
- Level Playing Field: The reporting requirements would apply to all publicly traded companies, creating a more level playing field for businesses that already adhere to high ethical standards.
Potential Disadvantages
- Increased Compliance Costs: Companies would face increased costs associated with tracking and reporting on their supply chains and transactions.
- Potential for Competitive Disadvantage: Companies that rely heavily on Chinese suppliers may face a competitive disadvantage if they are forced to find alternative sources.
- Risk of Inaccurate Reporting: Companies may struggle to accurately track and report on their supply chains, particularly if they are complex or opaque.
- Potential for Retaliation from China: The Chinese government may retaliate against companies that comply with the reporting requirements.
- Limited Scope: The bill only applies to publicly traded companies, leaving out private companies that may also be involved in forced labor or national security risks.
Constitutional Alignment
The bill appears to align with the Commerce Clause (Article I, Section 8, Clause 3) of the US Constitution, which grants Congress the power to regulate commerce with foreign nations. By regulating the import of goods produced with forced labor, the bill seeks to prevent unfair competition and protect American consumers.
There are no apparent violations of individual rights or liberties protected by the Bill of Rights. The reporting requirements are aimed at promoting transparency and accountability, rather than restricting freedom of speech or expression.
However, the bill's focus on China could raise concerns about potential discrimination or targeting of a specific country, which could be subject to legal challenges.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).