The U.S. State Department Monday issued its annual report on world-wide trafficking in persons. Ten countries were cited for failing to adequately combat the problem and could face U-S sanctions, while a number of others, including U.S. allies Japan and Turkey, were singled out for criticism and placed on a so-called "watch list."

Officials here are stressing that the point of the exercise is not to sanction countries, but to prod them into action to deal with what Secretary of State Colin Powell terms the "awful business" of trafficking in human beings.

Mr. Powell opened a news conference on the release of the State Department's fourth annual report on human trafficking, which is mandated by Congress and assesses the record of more than 140 countries around the world on the issue.

The report divides countries into three categories based on their performance, with those placed in the bottom tier facing U-S economic sanctions later this year, unless their record improves.

Mr. Powell said he believes progress is being made against trafficking because of the attention that has been focused on the issue by the U.S. reports, which he said are "not shy about naming names" of lagging countries.

But he said 600,000 to 800,000 people, and possibly more, are still being trafficked across international borders each year for the sex trade and forced labor, a number he said is so large as to "freeze our imaginations."

"The more you learn about the most vulnerable among us who are savaged by these crimes, the harder it is to look the other way, and the easier it is to understand the President's determination that we act to put a stop to all trafficking in persons," he said. "We're talking about women and girls, as young as six years old, trafficked into commercial sexual exploitation, men trafficked into forced labor, children trafficked as child soldiers. The victims are not few, and the vast majority are women and children."

In the new report, ten countries were placed in the third tier. There were four holdovers from last year: Burma, North Korea, Cuba and Sudan.

Joining the list were Bangladesh and two African states, Equatorial Guinea and Sierra Leone. Three Latin American states, Venezuela, its neighbor Guyana and Ecuador were also added, reflecting growing concern about sexual exploitation and forced labor in that region.

Of the ten third-tier states, Burma, North Korea and Cuba already face U.S. sanctions. Penalties could be leveled against the others if they do not demonstrably improve their records by October.

Most countries were placed in a middle category, or second tier, with a mixed performance. But the new report places several of them on a so-called "watch list" for countries not in compliance with Congressional standards and which could be downgraded.

Countries on the "watch list" include India, Russia, Mexico, Nigeria and U.S. allies Turkey, Greece and Japan. The head of the Bush administration's interagency task force on human trafficking, former Congressman John Miller, said Japan's efforts have not been commensurate with the problem thus far, though there are signs of progress:

"We believe that there has been a tremendous gap in Japan, which has a huge problem with slavery, particularly sex slavery, between the size of the problem and the resources and efforts devoted to adressing the problem," he said. "That being said, in the last month or two, the government of Japan at the direction of the Prime Minister, has started to take an enormous number of steps that we hope will lead to more prosecutions, more investigations, more convictions, more pursuit of organized crime figures, and more help for victims."

Mr. Miller said human trafficking is a "story of evil, but also hope" and said many countries have taken commendable steps over the past year to stop slavery.

He said they include Panama, which requires hotels and travel agencies to warn visitors about tough new laws on sex tourism, and Indonesia which has used its embassies in the region to shelter trafficking victims.

The report names several individual "heroes" in the fight against trafficking, three of whom appeared at Monday's news conference.

They are Swiss businessman Pierre Tami, who runs victim-assistance programs in Cambodia; Colombia's Ambassador to Japan Francisco Sierra whose embassy has aided Colombians trafficked to Asia; and Ghanaian tribal chief Togbega Hadjor, who has rescued children pressed into force labor in Ghana's Lake Volta region.