The United States upgraded Malaysia's status in a human trafficking report on Monday, a move that could help conclude a sweeping U.S.-led free trade agreement with the Southeast Asian state and 10 other Pacific Rim countries.

The State Department moved Malaysia up from the worst "Tier 3" category to "Tier 2 Watch List" in the annual Trafficking in Persons Report.

U.S. law prohibits the government from signing trade pacts with countries that are ranked in the worst group in the report.

The Trade Promotion Authority Act, which was enacted last month to help the U.S. government speed up TPP negotiations, bans it from signing trade deals with a country that is "not making significant efforts to bring the country into compliance" with standards to protect trafficking victims and which is referred to as a Tier 3 country in the annual trafficking report.

U.S. reports said recently that the department was considering upgrading Malaysia's status so President Barack Obama's administration can sign with its 11 partners the Trans-Pacific Partnership trade initiative, which Obama regards as a key achievement in his policy focusing on the Asia-Pacific region.

The improvement in the U.S. evaluation of Malaysia's human trafficking problems came a day before the 12 TPP negotiating countries resume their ministerial talks in Hawaii on possibly concluding the marathon negotiations this month.

Some members of the U.S. Congress, including those critical of the TPP, expressed concerns to Secretary of State John Kerry earlier this month about the upgrading of Malaysia in the human trafficking report, saying it would be premature.

The ministers of the 12 TPP countries will hold their Hawaii talks through Friday. The 10 other TPP countries are Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore and Vietnam.