Comment.  It's confusing enough that I am not sure what "disagree" means in this conversation.  A quick run through my sources indicates that "folk costume", "folk dress", "national dress", "ethnic costume", "traditonal dress" etc. are all used pretty much interchangeably.  I would support a move to "folk costume" or "folk dress" for the reasons cited above, but "folk costume" should not be a subset of "national dress" since modern political boundaries do not necessarily match either ethnic boundaries or political boundaries as they were at the time that folk dress was ossified (at least in Europe - as mentioned, some folk dress is still evolving).

[For what it's worth, I wouldn't characterize square dance clothes or bolo ties as folk dress - western wear is a modern retro concept based on romanticized notions of 19th century clothing, and bolo ties are a modern invention!  But bolo ties and cowboy shirts are certainly regional dress.]

By the way, the use of narrow use "costume" to mean "theatrical costume" is about as common as the use of "dress" to mean "a woman's garment with a skirt".  Both "costume" and "dress" have these narrow, non-specialist, everyday definitions which make it really difficult to decide what terms will be understood by users of Wikipedia.  "Clothing" is probably the most neutral and inclusive term, but we struggle in choosing "Medieval clothing" vs. "Medieval costume" vs. "Medieval dress".  And "folk clothing" is not used in the specialist literature and sounds really dumb.  In the museum and art-historical worlds, "costume" and "dress" are both preferred terms.

OED definitions are pertinent here: 
COSTUME: The mode or fashion of personal attire and dress (including the way of wearing the hair, style of clothing and personal adornment) belonging to a particular nation, class, or period.
DRESS: Personal attire or apparel: orig. that proper to some special rank or order of person, or to some ceremony or function; but, in later use, often merely: Clothing, costume, garb, esp. that part which is external and serves for adornment as well as for covering.

 is right, in that there isn't a simple solution; we're going to have a ton of redirects and alterate terms whichever way we go.  Gievn the OED definitions, I'd say "Folk costume" is more accurate.  But I personally prefer "Folk dress", and I'd choose that over "National dress". -