Corruption impedes progress in Thailand, and workers die in both because of conditions, says US state department's report

The US has signalled its mounting concern over modern-day slavery in Thailand and Qatar after it downgraded both countries on its human trafficking watchlist following revelations of appalling maltreatment of migrant workers.

Thailand was relegated to the lowest rank in the state department's Trafficking in Persons (TiP) report – meaning it is now considered no better than North Korea, Iran or Saudi Arabia in the way it treats workers and protects them from abuse. Qatar was demoted to a watchlist one rung above, and will join Thailand if it doesn't improve its record in the coming years. Malaysia was also downgraded.

The American censure comes amid widespread criticism of Thailand and Qatar, following two Guardian investigations that exposed repugnant conditions of slavery in both countries.

"There cannot be impunity for those who traffic in human beings," said John Kerry, the US secretary of state. "It must end." Slavery, he said, "rips and tears at the fabric of the rule of the law".

He added that consumers should also bear some responsibility for combating the trafficking business, estimated to be worth £100bn a year. "It is for each of us to make sure the goods we buy are free from forced labour."

The leading state department official for combating trafficking added that Guardian investigations exposing slavery in Thailand and Qatar had helped keep the spotlight on abuse in the run-up to yesterday's downgrade.

"The recent investigations [focusing on slavery and trafficking issues] in Thailand were fortuitous in their timing because, as we were doing our diplomatic job, these pieces of work have created a conversation around serious issues of trafficking in global fisheries," said Luis CdeBaca.

"Over the past year we have seen the Guardian, as well as the ITUC [International Trade Union Confederation], Amnesty and Human Rights Watch all shed light on the vulnerability of hundreds of thousands of migrant workers in Qatar. In Qatar we see a dramatic reliance on foreign labour – yet, even though there are legal structures in place to protect [migrant workers], these seem to exist largely on paper."

In Thailand, the Guardian investigation found that slaves forced to work on Thai fishing boats are integral to the production of prawns sold in the UK, US and EU. In Qatar, an undercover Guardian investigation exposed severe labour abuses in a country where migrant workers are tethered to a single employer, often denied pay for months at a time – and even refused the right to leave the country.

In both countries, workers die because of the way they are treated.

Kerry called for blunter language to describe the problem estimated to face 20 million people worldwide. "It is not 'a form of slavery', it is 'slavery'," he said.

The TiP report is considered the benchmark index for global anti-trafficking efforts, as it ranks 188 nations according to their willingness and efforts to combat trafficking and slavery. However critics argue that it is coloured by US interests.

Thailand's relegation to tier 3 of the list is an automatic downgrade after four years on the tier 2 watchlist, where it was repeatedly warned to make significant improvements to its anti-trafficking law enforcement, protect trafficked victims and punish perpetrators.

The downgrade could cause diplomatic tensions between the two strategic political and trade partners, and could result in economic sanctions and loss of development aid for Thailand, which may also find itself blacklisted by companies no longer wishing to do business with a "pariah" government.

The report cites corruption "at all levels" as impeding significant progress and claims that anti-trafficking law enforcement remains insufficient compared with the overall scale of trafficking and slavery. It also states that, despite frequent media and NGO reports detailing instances of trafficking and slavery in sectors such as the fishing industry, the government "systematically failed" to investigate, prosecute or convict boat owners and captains, or officials complicit in the crimes.

In a statement the Thai government said it disagreed with the state department's decision but would continue to fight against trafficking. "In 2013, Thailand made significant advances in prevention and suppression of human trafficking along the same lines as the state department's standards," it said. "While the latest TiP report did not recognise our vigorous, government-wide efforts that yielded unprecedented progress and concrete results, Thailand remains committed to combating human trafficking."

The US downgraded Qatar to the tier 2 watchlist after the state department concluded it had not demonstrated sufficient willingness to address its human trafficking problems. The report said that, despite detailed anti-trafficking legislation and labour laws, Qatar remained a destination country for men and women subjected to forced labour and forced prostitution, and that "many" of its 1.2 million migrant workers faced conditions of modern slavery when they arrived to work there.

In its analysis the state department criticised Qatar's exploitative sponsorship system, the arrest and detention of victims of trafficking and the failure to implement anti-trafficking laws and protect migrant workers from exploitation and abuse. It also highlighted the denial by government officials that human trafficking exists in Qatar at all.

Qatar has since made promises of reform, but workers there say little has changed. The Qatari government did not respond to a request for comment.

Kerry said he received several calls from foreign ministers complaining about being included or downgraded in the report. He said the worst "zones of vulnerability" were in countries where the rule of law was weak, but insisted all countries needed to address human trafficking, including the US. "Some of the worst abuses happen in places where you rarely think to look … aboard fishing vessels and in processing plants," he added.

The state department said the Guardian's investigations were on a different timeline to their own. But CdeBaca added: "We appreciate good reporting when we see it, and we feel the fight against human trafficking needs government reporting and civil society reporting, but it also takes dedicated journalists to play into the mix and, while our decision-making processes were operating on a different timeline, we certainly read the recent articles with interest."

Critics argue the report has its limitations, though. "There are countries on either side of US foreign policy whose rankings are very unlikely to shift either up or down. Some friends of the US will never go below a tier 2 and some countries that have a difficult relationship with the US are equally unlikely to go above a tier 3," says Anne Gallagher, a UN advisor and legal expert on international trafficking.

But Gallagher concedes it does have impact. "A bad TiP report ranking is like a bad report card, even if countries profess not to care, they don't like it. You don't get an issue more political than trafficking."