Aung San Suu Kyi, leader of Burma, meets with Gen. Prawit Wongsuwan, Thailand’s deputy prime minister, in Naypyidaw, Burma. (Agence France-Presse via Getty Images)

The State Department has named Burma as one of the world’s worst human trafficking offenders, and it removed Thailand from the list, citing progress in cracking down on forced labor in the seafood industry.

The annual Trafficking in Persons Report released Thursday is watched closely by the countries clustered at the bottom. It is viewed as a black mark on their international reputations and can have financial consequences. U.S. law places restrictions on non-humanitarian aid to countries with the worst records.

Secretary of State John F. Kerry called the report “a clarion call to each of us to do all we can to eradicate these horrors.”

For many countries, the ratings were a balancing act.

Burma's parliament elected a close friend and confidant of Nobel laureate Aung San Suu Kyi as president on March 15, making Htin Kyaw the first civilian head of state since the 1960s. (Reuters)

The report said human trafficking in Thailand remains a significant problem. Workers in the seafood industry are forced onto fishing boats for years at a time to toil 18 to 20 hours a day, the report said. They are sometimes beaten and drugged to work longer, and some have been killed for trying to escape.

But the report said the government is making progress against the trade. It has increased the number of investigations and prosecutions of traffickers, including ship owners and captains, and closed down guilty firms.

Thailand’s upgrade was welcomed by the ruling military junta. Bangkok complained bitterly last year, when it was listed as a Tier 3 country, the lowest ranking possible, which is reserved for countries that are doing little or nothing to deter human trafficking. This year, it was bumped up half a step to a Tier 2 “watchlist” for countries that do not meet the minimum standards but are trying to curb the practice.

Thailand illustrates the potential geopolitical ramifications of the report. Relations between Thailand and the United States have been uneasy since the military seized power in a 2014 coup. But now, Washington wants to improve ties to counter China’s growing regional influence and to build a unified regional front that will challenge Beijing’s territorial claims on man-made islands in the South China Sea.

The demotion of Burma, also known as Myanmar, from the Tier 2 watchlist to a Tier 3 country is a reprimand to the democratically elected government. It is hoped the poor rating will goad the government to work harder to stop the use of child soldiers and forced labor.

It also appears to express U.S. concern over persecution of the Rohingya Muslim minority. Burma’s Nobel Peace Prize-winning new leader, Aung San Suu Kyi, has been accused of not paying enough attention to the Rohingya’s fate. A United Nations report last month said 1.1 million Rohingya in Burma have been systematically discriminated against and live under severe movement restrictions. Many in the country’s Buddhist majority consider the Rohingya illegal immigrants from Bangladesh.

Kerry visited Burma in May, part of the Obama administration’s diplomatic push to better relations with the former military dictatorship that is emerging from years of international isolation.

President Obama has lifted some sanctions against the country, but others have remained in place. The downgrading suggests more U.S. sanctions may be forthcoming.

The State Department also demoted Uzbekistan, where the government forces workers to take part in the annual cotton harvest, from the watchlist to the blacklist.

But it retained Malaysia’s ranking on the watchlist, where it was elevated last year not long after mass graves of human trafficking victims were discovered near the Thai border.

Human rights group applauded the downgrades of Uzbekistan and Burma but said Malaysia and Thailand still belong at the bottom.

Sarah Margon, Human Rights Watch’s Washington director, said Thailand did not deserve an upgrade. “The steps taken were positive but not significant enough yet to trigger an upgrade,” she said.

She said Malaysia’s move last year to the watchlist was widely believed to be a reflection of the country’s involvement in the Trans-Pacific Partnership.

“The State Department’s decision to maintain their Tier Two watchlist ranking is a huge disappointment, given the absence of any significant or meaningful efforts to tackle human trafficking by the Malaysian government,” Margon said.