The United States has blacklisted Thailand, Malaysia and Venezuela, accusing them of failing to stop human trafficking, opening them to possible sanctions, and putting them in the same category as North Korea and Syria.
The three countries were all downgraded to the lowest "Tier 3" status in the 2014 US State Department report on trafficking released on Friday.
The report said the countries failed to meet minimum standards in fighting human trafficking, which affects 20 million people globally.
There cannot be impunity for those who traffic in human beings. It must end.
Secretary of State John Kerry launched the annual report of how 188 governments around the world have performed in fighting the flesh trade and other forms of exploitative labour.
"There cannot be impunity for those who traffic in human beings. It must end,'' Kerry said, describing it as slavery in the 21st century and an illicit business generating annual profits of $150bn.
Other countries in the list are Gambia, Iran, North Korea, Russia, Saudi Arabia, Syria and Zimbabwe.
Qatar, where more than 90 percent of the workers are foreign migrants, was demoted to watch list status. That comes as the country ramps up construction to host the 2022 football World Cup.
The department, however, improved its rating of strategic rival China, citing Beijing's steps to abolish re-education-through-labour camps.
In April, US politicians called on President Barack Obama to punish countries that do too little to fight trafficking.
With the release of the report, Obama now has 90 days to determine whether to apply sanctions against those governments.
Fighting a downgrade
Thailand, the oldest ally of the US in Asia, had mounted a determined campaign to prevent the downgrade that could hurt its seafood and shrimp industries for which America is a key market.
Thai ambassador to the US, Vijavat Isarabhakdi said he was disappointed with the report, saying it did not recognise "our vigorous, government-wide efforts that yielded unprecedented progress and concrete results."
The US report said the majority of trafficking victims in Thailand - "tens of thousands ... by conservative estimates" - were migrants from neighbouring countries "forced, coerced, or defrauded into labour or exploited in the sex trade".
The report cited stories of "trafficking-related complicity by Thai civilian and navy personnel in crimes involving the exploitation" of Rohingya Muslims who have fled Myanmar by the tens of thousands over the past year.
The head of Thailand's ruling military council, General Prayuth Chan-ocha, vowed to crack down on trafficking, saying in a television address, "We will cover the loopholes of exploitation by influential groups and capitalists."
In the case of Malaysia, the report said it had made "inadequate efforts to improve its flawed victim-protection regime" and had investigated fewer trafficking cases in 2013 than in 2012.
Meanwhile, the report said Venezuela was making insufficient efforts to combat sex trafficking and forced labour.