Japan has pledged to increase efforts to stop human trafficking after a US State Department report criticised its record on preventing sexual slavery.
Japan's yakuza gangs operate an international trade in human slavery
The report placed Japan on a "watch list" of countries with poor human rights records, such as Laos and India.
Thousands of women and children arrive in Japan each year from across Asia and eastern Europe, many of whom are sold into prostitution by criminal gangs.
A Japanese government spokesman said stopping the trade is "an urgent duty."
Chief Cabinet Secretary Hiroyuki Hosoda added: "We want to strengthen measures in our country where there are inadequacies."
"Eliminating human rights violations is an urgent duty and it is necessary to form a body linking up the related agencies to take appropriate measures."
Japan has no comprehensive law against human trafficking, and powerful criminal gangs, known as yakuza, operate an international trade in human slavery.
Tier 1: Australia, Colombia, South Korea, UK
Tier 2: Afghanistan, China, Lebanon, Switzerland
Tier 2 (Watch list): Cyprus, Japan, Russia, Turkey, Zimbabwe
Tier 3: Burma, Cuba, North Korea, Sudan
Last year Japan's National Police Agency arrested 41 people for trafficking-related offences, eight of whom were traffickers, the US report said.
The report, Trafficking In Persons 2004, divides nations into three tiers.
The first tier includes many European nations as well as some states, such as Colombia, which meet US-set goals such as minimising sex tourism and freezing the finances of people smugglers.
Many nations are ranked in the second tier, while a handful of countries, including Bangladesh, North Korea and Cuba, are ranked in the lowest tier.
Threat of sanctions
These countries face US-imposed sanctions, Secretary of State Colin Powell said on Monday.
Japan has been ranked on a second tier "watch list" alongside other countries judged not to have met the minimum standards.
These include Russia and Greece but are generally less developed nations, such as Madagascar, Ethiopia and Kazakhstan.
Countries on the "watch list" that fail to improve their performance face the threat of "relegation" to the bottom tier.
The report was criticised by international pressure group Human Rights Watch.
The organisation questioned Japan's "watch list" status, pointing to the lack of any concrete legal proposals to outlaw trafficking, and claimed Japan should be relegated to the bottom tier.