US Secretary of State Mike Pompeo called out the regime for its use of forced labor.

"In North Korea, the government subjects its own citizens to forced labor both at home and abroad and then uses proceeds to fund nefarious activities," he said at the report's launch ceremony.

The report details abuses by the North Korean government, including its forced mobilization of adults and school children to work in factories and other sectors, and its "egregious human rights violations" that "can fuel trafficking in neighboring China."

The designation was given because North Korea does not fully meet the minimum standards for the elimination of trafficking and is not making significant efforts to do so, according to the report.

"The government continued state-sponsored human trafficking through forced labor in mass mobilizations of adults and children, in prison camps as part of an established system of political repression, in labor training centers, and through its exportation of forced labor to foreign companies," the report said.

"It used proceeds from state-sponsored forced labor to fund government functions as well as other illicit activity. It did not protect potential trafficking victims when they were forcibly repatriated from China or other countries," it added.

The report, though annual, comes at a time when Washington and Pyongyang are locked in a deadlock in negotiations to dismantle North Korea's nuclear weapons program.

It also comes as Chinese President Xi Jinping is in Pyongyang for talks with North Korean leader Kim Jong-un, raising speculation Beijing will use its leverage over North Korea as a bargaining chip in a bitter trade row with the US

The report cast North Korea as a country that uses forced labor as part of an established system of political repression and a pillar of the economic system.

It noted that some 80,000 to 120,000 prisoners are held in political prison camps and that all prisoners, including children, are subject to forced labor.

"Prisoners are subjected to unhygienic living conditions, beatings, torture, rape, a lack of medical care, and insufficient food. Many prisoners do not survive," the report said.

North Korean workers who are sent abroad by the government also faced conditions of forced labor. Salaries were often deposited into accounts controlled by the North Korean government and workers only received a fraction of the money, the report said.

If they failed to meet production or work targets, workers could also face punishment.

The UN Security Council adopted a resolution in 2017 banning countries from issuing new work permits to North Korean laborers and required the expulsion of existing workers by the end of 2019.

Many countries took steps to reduce the workers' numbers but several countries resumed issuing work permits in the second half of 2018, the report said, citing other reports.

North Korean refugees living illegally in China were particularly vulnerable to trafficking, including the kidnapping of North Korean women and girls who were then forced into prostitution.

And if found by Chinese authorities, victims were often forcibly returned to North Korea to face harsh punishment, including forced labor in labor camps, torture, forced abortions and even death, the report said.

South Korea, meanwhile, was listed in the highest Tier 1 category for the 17th straight year, along with countries such as the US, Britain, France and Sweden. (Yonhap)