Myanmar, Uzbekistan, Sudan and Haiti on list of worst human trafficking offenders

(Adds Hong Kong statement, Thai PM)

By Matt Spetalnick and Lesley Wroughton

WASHINGTON, July 1 (Reuters) - The United States has placed Myanmar, Uzbekistan, Sudan and Haiti on its list of worst human trafficking offenders, drawing guarded praise from some human rights groups following criticism that last year's State Department report was politicized.

While more than two dozen countries were downgraded in the closely watched Trafficking in Persons (TIP) report announced on Thursday, Thailand was removed from the bottom rung despite what the State Department described as "widespread forced labor" in the country's vital seafood industry.

Other nations demoted to the lowest ranking were Turkmenistan, Djibouti, Papua New Guinea and Suriname.

But the Philippines, a key U.S. ally widely known for its thriving sex industry, was moved up to the top tier - the same level as countries like the United States and Germany - even though the report said sex trafficking there was still a "significant problem."

Despite that, some human rights groups especially welcomed downgrades for Myanmar and Uzbekistan, strategically important U.S. partners, and said those decisions may reflect an effort to restore credibility to the annual report, which grades countries in the fight against modern-day slavery.

Critics had contended that politics trumped human rights in some of last year's key ranking decisions.

"On the whole, this year's trafficking report accurately reflects and critiques the record of countries around the world in addressing human trafficking and forced labor, unlike the report issued last year, which was marred by strong indications of political interference," said Sarah Margon, Washington director for Human Rights Watch.

But she also said Thailand's upgrade, which the report linked to legal reforms and increased prosecutions, was "problematic." Still, it could smooth U.S. relations with the military-run government at a time when Washington seeks Southeast Asian unity against China in the South China Sea.

"We're not doing it (tackling human trafficking) for anybody, but it's your duty to do so," Thai Prime Minister and junta leader Prayuth Chan-ocha told reporters in Bangkok.

"We don't need anyone to force us."

The State Department demoted Uzbekistan to the bottom ranking just a year after giving a higher rating to the central Asian country, where state-orchestrated forced labor underpins its vital cotton industry. Turkmenistan's downgrade was also based on its policy of forcing citizens to work the cotton fields.

The report also downgraded Hong Kong from "Tier 2" to the "Tier 2 watchlist" and the local government in the Chinese territory said it "vehemently and categorically" rejected the decision.

"We cannot accept that Hong Kong is a destination, transit and source territory for men, women and children subjected to sex trafficking and forced labor," the Hong Kong Special Administrative Region said in a statement.

NOT INFLUENCED BY POLITICS

Secretary of State John Kerry said ranking decisions were not influenced by politics or other factors. "There are some tough calls. In the end they come down to an element of discretion, but not much," he said.

A Reuters investigation published in August found that senior diplomats repeatedly overruled the State Department's anti-trafficking unit and inflated the grades of 14 strategically important countries. The State Department denied any political considerations but U.S. lawmakers raised questions about the report's credibility and called for reforms.

U.S. Senator Bob Menendez, expressing dismay over Malaysia and Cuba retaining higher rankings, vowed to introduce legislation to address "flaws" in the ranking process - a threat he issued last year but which has yet to translate into action.

The downgrade for Myanmar appeared aimed at prodding the country's new democratically elected government, headed by Nobel Peace Prize winner Aung San Suu Kyi, and its still-powerful military to further curb use of child soldiers and forced labor.

It was also meant to underscore U.S. concern about continued persecution of the Rohingya Muslim minority in the Buddhist-majority nation. The reprimand came despite U.S. efforts to court Myanmar to help counteract China's rise in the region.

The Myanmar foreign ministry called the downgrade regrettable.

"Myanmar has been addressing the TIP issue as a national priority and making tangible progress," it said in a statement. "It is hoped that steps can be taken to ensure that restrictions associated with Tier 3 countries will not be allowed to hamper cooperation between the United States and Myanmar."

In the Philippines, Darlene Pajarito, executive director of the government's Inter-Agency Council Against Trafficking, said she was elated at her nation's premier ranking.

"They must have recognised our work throughout the years and they must have seen that we have sustained all efforts to stop trafficking and prosecute people behind these activities," she said.

The report also highlighted the Syria refugee crisis and reiterated that almost all sides in the civil war there, including government forces as well as U.S.-backed Syrian Kurdish YPG fighters, were recruiting child soldiers.

The report sorts countries into four categories: Tier 1 for nations that meet minimum U.S. standards; Tier 2 for those that are making significant efforts to do so; Tier 2 "Watch List" for those that deserve special scrutiny; and Tier 3 for countries that fail to fully comply with the minimum U.S. standards and are not making significant efforts to do so.

A Tier 3 rating can trigger sanctions, but U.S. presidents frequently waive such action. (Additional reporting by David Brunnstrom and Patricia Zengerle in Washington; Manuel Mogato in Manila, Pracha Hariraksapitak in Bangkok, James Ponfret in Hong Kong and Aung Hla Tun in Yangon; Editing by Jeffrey Benkoe, Cynthia Osterman and Raju Gopalakrishnan)

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