The report is the bureaucracy's way of keeping score in the war on drugs, a war which is a long, long way from being won.
No country likes the idea of being on America's "bad guy" list and, in fact, many openly resent the idea that the United States, with its own huge drug consuming habit, produces the yearly report.
Sensitive to such criticism, Secretary of State Madeleine Albright says that all countries have to work together -- those where drugs are produced, those where consumption is a problem and those that allow trafficking.
"I assure you," said Albright, "that we are not demanding more of them than of ourselves."
White House National Drug Policy Director Barry McCaffrey concedes America has an annual drug habit which costs $57 billion, $37 billion of that spent on cocaine.
McCaffrey also points out something of a shift in drug-related problems affecting countries in our hemisphere.
The U.S. used to be thought of as just having a consumption problem. Not any longer.
Now, says McCaffrey, the U.S. also has a large problem as a producer of methamphetamines.
And countries in South America, formerly known only as drug production centers, now have consumption problems of their own.
McCaffrey says there is "an ongoing crisis in drug consumption in the Americas."
What the Clinton administration wants to see is full cooperation. They have had some success in the last year getting both Mexico and Colombia to extradite their own citizens to the U.S. for prosecution in drug-related cases.
Clinton declared that Mexico is fully cooperating with U.S. counter-narcotics efforts, ignoring recommendations by top Republican lawmakers.
Senate Foreign Relations Committee chairman Jesse Helms and House International Relations Committee chairman Benjamin Gilman, R-N.Y., said last week that the situation in Mexico continues to deteriorate. They recommended that Mexico be "decertified'' as a cooperative partner, a move that, under law, could have brought about economic reprisals against Mexico.
While Mexico remains the key transit route for up to 60 percent of the cocaine sold in the U.S., the Zedillo goverment has designated drugs as that country's principal national security threat, according to the report.
Speaking of Mexico, McCaffrey says, "I think they're deadly serious about facing up to this."
If the Mexican effort is a charade, "it's the most expnsive one I've ever seen,'' McCaffrey said. He said Mexico's operating budget for anti-drug activities is $1 billion, with $520 million earmarked for equipment.
Albright also defended Mexico's record. "Despite the many challenges that remain, Mexico has become a real partner in our battle against drugs,'' she said.
Mexican Attorney General Jorge Madrazo said Mexico's own best interests demand fighting drug trafficking. ``It's a matter of national security, for the protection of our children. We believe in multilateral cooperation,'' he said.
In Colombia, the Pastrana government has developed a plan to go after the newly planted cocoa fields in the southern part of the country.
Colombia is the world's largest producer and distributor of cocaine and has been working closely with the Clinton administration on drug issues. Clinton is seeking $1.6 billion in assistance for Colombia over the next two years, most of it to counter drug activities.
On the other end of the spectrum are Afghanistan and Burma, which the president recommended be decertified because of their role in heroin trafficking.
In Afghanistan, the ruling Taliban regime oversees the world's largest production of opium poppy. And while most of the heroin produced there goes to Europe, North America is also targeted, says the report.
Having said that, McCaffrey concedes he's "not sure that any action we take has any impact at all on Afghanistan."
Four other countries -- Cambodia, Haiti, Nigeria and Paraguay -- did not meet the criteria for certification, but they were not penalized because of vital U.S. interests, McCaffrey said. The four received similar designations last year.
The report also contained information on money laundering, financial crimes, chemical controls, corruption by officials, as well as regional and country reports.
The remaining 20 countries subject to evaluation were certified as fully cooperative.
The review involved the following 26 countries and territories: Afghanistan, Bahamas, Bolivia, Brazil, Burma, Cambodia, China, Colombia, Dominican Republic, Ecuador, Guatemala, Haiti, Hong Kong, India, Jamaica, Laos, Mexico, Nigeria, Pakistan, Panama, Paraguay, Peru, Taiwan, Thailand, Venezuela and Vietnam.
Also Wednesday, the State Department issued its annual report on the state of narcotics control efforts worldwide.
The report hailed a "continuing, steady decline'' last year in the Andean coca crop, even taking into account the expansion of cultivation in Colombia.
Overall, coca production in the Andes reached a record low, with the most dramatic declines occurring in Peru and Bolivia, formerly the world's premier producers, the report said. The Andes is the source of all cocaine destined for the United States.
By Charles Wolfson