"As we stated previously in this matter, we do not believe that there is any violation of obligations under the labor chapter of the free trade agreement," the statement said.
The embassy said 98 percent of the 4,600 workers fired during the strike had been either reinstated, reemployed or otherwise had their cases resolved.
Dozens of people died after labor protests that began in February 2011 by Bahrain's Shiites, who represent 70 percent of the population but are excluded from top political and security posts.
AFL-CIO officials say they are disappointed that the Labor Department took 17 months to issue the report, saying Bahrain has continued to persecute workers and support witch hunts of union and human rights activists.
"The U.S. government now must demonstrate that the consultations comprise a serious effort to address Bahrain's blatant disregard for the trade agreement's labor chapter," said Cathy Feingold, international director of the AFL-CIO.
Feingold said more talks must be followed with "concrete and effective actions" to prevent further persecution of Bahraini workers.
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