(FORTUNE Magazine) – ACROSS WESTERN ECONOMIES, THE 2005 CHINA FREE-trade freak-out is in full swing. Politicians are saying and doing things they ought to be ashamed of. Certain industry groups and labor unions want us to believe that their own problems are national emergencies. America's trade deficit hit an all-time record last year--but we're running a massive trade surplus in nonsense.

The proximate cause of so much hooey was the end of global textile and apparel quotas Jan. 1. In a rational world the results wouldn't have surprised anyone. The elimination of quotas had been scheduled years in advance. The productivity of Chinese factories was not exactly a secret, and the deals for importing Chinese textiles under the new regime had been cut months earlier. Nonetheless, the entire Western world seemed astonished when ships actually unloaded the goods. Since quotas on some products had been set ridiculously low, the increase in imports looked huge: women's and girls' cotton trouser imports up 1,081% in the U.S. in January, for example; imports of tights and pantyhose up 1,940% in the European Union.

Combine those seemingly alarming numbers with record overall American and European trade deficits with China, and the result is frantic efforts to cut back Chinese imports right away. Specifically:

● Senator Charles Schumer (D-New York) proposed a 27.5% tariff on all Chinese imports if Beijing doesn't revalue its currency within six months, warning ominously, "It is time to bring out the big stick." The Senate voted 67--33 to move his bill forward.

● The European Commission, galvanized into action by the Chinese pantyhose crisis, began an inquiry into whether import controls should be reimposed.

● Senator Evan Bayh (D-Indiana) launched his own bill to make it easier for Washington to impose import duties. Tub-thumping at the confirmation hearings for Rob Portman as the new U.S. Trade Representative, Bayh declared, "American workers and businesses don't need more rhetoric--they need results." Translation: They need protection, because they can't cut it in a free global economy.

Amid so much political theater and disingenuousness, a few things need to be said plainly. Though every politician promises to advocate the interests of "the people" over those of "special interests," the latest China bashing is entirely on behalf of special interests, namely the textile and apparel industries and the labor unions representing their workers. Those industries and unions are substantial, and they've suffered a terrible beating by imports in the past few years. A large federal program, Trade Adjustment Assistance, exists to help the workers, and whether they deserve more help is a legitimate question. But we are definitely talking about a special interest: The textile and apparel industries in total employ less than 0.5% of working Americans.

As usual in debates of this kind, no one speaks for the interests of millions of American consumers. If anyone did, think what a case could be made for the end of textile quotas. For example, more than 32 million households (comprising more than 80 million people) get by on an annual income of less than $25,000 each. For them, any savings on one of life's most basic necessities--clothing--is precious. The elimination of quotas is a giant, welcome gift to Americans of every race and sex in every state.

China's currency isn't the problem. It has been bizarre to hear pols across the spectrum suddenly curse the Chinese for following the same currency policy they've been pursuing for more than a decade. The Chinese peg the yuan to the dollar at a rate that may be lower than the market would set. They must know their economy would be better off, soon if not now, with a floating currency, and they'll surely make the switch over the next few years. Results might include a lower U.S. trade deficit--experts differ--but would almost certainly include higher U.S. prices and probably higher interest rates. On the whole, floating rates are better than fixed ones. But they won't solve America's China trade problem.

America needs to stop obsessing over girls' knit-shirt imports and the value of the yuan and focus on the big central reality, which is that many of our industries are not globally competitive. Manufacturing businesses like textiles are the most visible victims so far, but tech, services, and information are where the battle for the future is being fought, and we're losing our lead in those sectors as well.

In a global market, how can American workers be worth as much as they cost? We don't hear many public officials proposing answers. If we did, perhaps our towering nonsense surplus would start to come down. ■

GEOFFREY COLVIN, senior editor at large of FORTUNE, can be reached at gcolvin@fortunemail.com. Watch him on Wall $treet Week With FORTUNE, weekends on PBS.