WASHINGTON, July 1 (Reuters) - An annual U.S. State Department report released on Thursday said discriminatory policies perpetuated human trafficking, drawing a link with systemic racism in the United States and abroad for the first time. U.S. Secretary of State Antony Blinken said in the Trafficking in Persons report that inequities undercut Washington"s battle against human trafficking. "If we"re serious about ending trafficking in persons, we must also work to combat systemic racism, sexism and other forms of discrimination," Blinken said. A State Department official said it was the first time the report drew a connection to systemic racism. "We know that talking about these issues in the report is just the beginning and are committed to working with our partners to create and implement plans for how to ground our anti-trafficking response in equity going forward," a senior State Department official said. The United States has been re-examining its treatment of African Americans since nationwide protests last year sparked by the murder of George Floyd, a Black man, by a white police officer. U.S. authorities have also warned of increased threats from white supremacist groups. The report also cited the effect of the COVID-19 pandemic on human trafficking, as traffickers capitalized on the pandemic and governments diverted resources to fight the health crisis. The report looked at countries and territories and ranked them into four tiers, downgrading countries such as Ethiopia but upgrading others. ETHIOPIA The United States faulted Ethiopia for not demonstrating increased efforts to eliminate trafficking. The report highlighted the conflict in Ethiopia"s Tigray region that has killed thousands of people, displaced more than 2 million people and pushed hundreds of thousands to the brink of famine. The report said that since the conflict began in November, international organizations increasingly reported armed actors were responsible for committing human rights abuses and gender-based violence, including potential trafficking crimes. Ethiopians seeking asylum in Sudan were increasingly vulnerable to trafficking and unaccompanied children in the conflict areas may be vulnerable to recruitment by non-state armed groups, the report also warned. BELARUS Belarus was cited for "key achievements" even if, as the report said, resident Alexander Lukashenko’s government did not "fully meet the minimum standards for the elimination of trafficking." The report made no mention of Lukashenko’s brutal crackdown on ongoing protests over his claim of victory in a 2020 presidential election widely seen as being rigged. SAUDI ARABIA Saudi Arabia, a key U.S. ally in the Middle East, was cited for "making significant efforts" toward eliminating human trafficking, the report said. However, the government failed to meet minimum standards in a number of areas, including fining, jailing and deporting foreign workers for prostitution or immigration violations even though many may have been trafficking victims, the report said. ISRAEL The report said Israel, Washington’s closest Middle Eastern ally, had worked to eliminate human trafficking, but its efforts “were not serious and sustained” compared to the previous reporting period even accounting for the impact of the COVID-19 pandemic. Victim identification policies “sometimes re-traumatized” victims and delayed their access to necessary care, sometimes for years, while the government reduced its overall efforts to investigate, prosecute and convict traffickers, it said. CHINA The report repeated past charges that China has "a government policy or pattern of widespread forced labor," including through the continued mass arbitrary detention of more than one million ethnic Uyghurs and other Muslims in the western region of Xinjiang, where the United States has accused Beijing of committing genocide against the minorities. TURKEY The United States added Turkey to the list of countries implicated in the use of child soldiers over the past year, placing a NATO ally for the first time in such a list, in a move likely to further complicate fraught ties between Ankara and Washington. read more MALAYSIA The State Department downgraded Malaysia to the worst ranking after a string of complaints by rights groups and U.S. authorities over the alleged exploitation of migrant workers in plantations and factories. read more