By Amy Sawitta Lefevre BANGKOK (Reuters) - Thailand will likely avoid U.S. sanctions even if it stays on the lowest tier of an annual State Department human trafficking report, Thailand's defence minister said on Wednesday, days before the crucial progress report is due out. The United States automatically downgraded Thailand, one of the oldest U.S. treaty allies in Asia, to the lowest "Tier 3" status in its 2014 Trafficking in Persons Report after Thailand stayed on the report's so-called Tier 2 Watch List, the second-lowest rank, for four consecutive years. Washington said Thailand, a regional human trafficking hub, had not met the minimum standards for the elimination of the illicit trade. A Tier 3 rating would normally trigger a range of sanctions from the United States but President Barack Obama waived the sanctions in Thailand's case. Thai Defence Minister Prawit Wongsuwan said he was confident Thailand would again avoid sanctions. "I don't think there will be sanctions because Thailand has done things according to the rule of law, so we can rest easy," Prawit told reporters. "Thailand has done its most. Even if we stay on Tier 3 we have done our best," he said. An official at the U.S. embassy in Bangkok declined immediate comment. Businesses in Thailand will also be hoping there will be no sanctions, as Southeast Asia's most export-dependent economy after Singapore struggles to revive its economy. A new U.S. report card on Thailand's anti-trafficking efforts is due out next week. Thailand is hoping that a crackdown by Thai police on trafficking gangs in May and June this year will help sway any decision by the United States. Some officials say that is unlikely as the report only covers the year to March 2015 so does not include the latest crackdown. A Reuters investigation this month raised questions about the long-term effectiveness of Thailand's crackdown on the lucrative trafficking syndicates. The crackdown on trafficking camps along its border with Malaysia made conditions too risky for people smugglers to land their human cargo, so they simply set them adrift. Many landed in Indonesia, Malaysia and Myanmar. In an unexpected move, the United States is upgrading Malaysia from the lowest tier on its list of worst human trafficking centres to the so-called "Tier 2 Watch list", a status that could smooth the way for an ambitious U.S.-led free-trade deal with Malaysia. The decision comes despite Malaysia's slow pace of convictions in human trafficking cases. (This story has been refiled to fix typo in paragraph four) (Editing by Jeremy Laurence)
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