Female circumcision that our scholars talk about is different from the practice of some African communities (including Muslim) in which the female genitalia is mutilated. In the hadeeth the Prophet advised removing a very slight portion of flesh, which is that clitoral hood. He forbade excising much and explained that it would be better for the husband that only a very small piece of flesh gets removed. This means that female circumcision in Islam is not even partial clitoridectomy, even though a very small portion of the clitoris may be removed in the procedure, but it is simply the removal of the clitoral hood.
As for the ruling, it is controversial, the majority of the scholars regard it mustahab (preferable sunnah), some regard it allowable and some consider it wajib (obligatory) because of the previous hadeeth.
The question is not to ban female circumcision because of the position of certain nations, but how do we regulate it as Muslims? Most of the problem and the bad publicity stem from the fact that, not infrequently, unqualified people perform the procedure and they may do more harm than good. If it was left to the specialists, it wouldn't have been misused and wouldn't have gotten such bad publicity. So, it is essential that the medical doctors be trained in the procedure and become the only ones permitted to do it. The surgeon will then judiciously remove what needs to be removed.
What should we western Muslims do? For Muslims who live in the West, since it is not mandatory and it is at the same time illegal in the West, and would bring about harm to the people who practice it, I wouldn't advise having it done, as long as you are a resident/citizen of the west.
[Note: Other opinions that forbid/compel female circumcision can be found by searching the keyword circumcision.]