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This article analyzes the dispute settlement proceedings pending before the World Trade Organization (WTO) concerning the Fairness in Music License Act of 1998, a new provision of the US Copyright Act that exempts many bars, restaurants, and retail stores from paying license fees for performing broadcast music in their establishments. In May 1999, the European Community challenged the Act, and its predecessor "homestyle exemption," as a violation of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) and the Berne Convention for the Protection of Literary and Artistic Works (Berne). The FMLA dispute is the first time in history that US copyright laws will be judged by an international tribunal. The case is an embarrassing one for the United States, which has recently pursued a policy of aggressively encouraging other nations to provide strong legal protections for copyrighted works. Although officials within the Clinton Administration warned legislators that the Fairness in Music Licensing Act might be incompatible with the Berne and TRIPs treaties, Congress enacted the statute over their objections. Thus, in the first year of the new century, Congress may be faced with an unprecedented choice: modify the Copyright Act to satisfy the demands of international trade jurists or face retaliatory trade sanctions by the EC. In addition to analyzing the legal arguments available to the US and the EC under the Berne and TRIPs treaties, this article also seeks to explain why Congress deliberately chose to ignore past US intellectual property policy. Using insights from law and economics and from a study of the history of laws and licensing practices governing secondary uses of broadcast music, the article demonstrates how an increasingly broad free use exemption developed for businesses playing radio and television music. It then draws on these economic and historical insights to develop legislative reform proposals that are both compatible with United States' treaty obligations and that encourage performance rights organizations and associations of copyright users to reach an efficient private agreement to resolve the WTO dispute.