That won't work in today's global economy. I see you are from the US. For a moment imagine each state will have it's own language, currency and radically different regulations. How easy would it be to trade between those states and how competitive would each state be compared to China or India?
Europe used to be that patchwork of countries, languages and currencies about 2 to 3 decades ago. Sometimes you need to team up to keep up with the competition.
But it does work. China does huge quantities of business with Britain and the rest of the EU and they have radically different laws, timezones, languages, cultures and social/economic structures. And there is no common EU language, so being part of the EU doesn't do anything about the language differences. Not everyone in the EU uses the same currency, but currency differences are just about a non-issue these days. I can change the currency on sites like eBay to whatever I want, and I can buy product in any country with members selling on the site. I am totally abstracted from the mechanisms of currency trading on the back end.
Most of the EU countries are economically and socially relatively similar - well, compared to somewhere like Chile or Malaysia or Nigeria anyway. The commonality of laws offers little benefit, and I would argue (strongly) that whatever value is gained is more than lost when the technocrats come up with stupid bullshit like RoHS.
Trade agreements and currency/legal unions are different and unrelated things. There's no need to harmonize laws just to engage in trade. And, while I am sure it's an unpopular view among the most lefty of readers, countries ought to be acting in the best interests of their citizens, not in the best interests of society around the world. If Britain is giving more than it's getting, they do their citizens a disservice by staying in. And if Britain has more "power" (economically, socially, financially) than someone else, they should be leveraging that to get the best deal possible for British people.
I would say the EU has done a pretty piss-poor job of handling the small number of crises that have been dealt it so far - and it hasn't really solved much of anything. I don't think there's any evidence that the member countries would be worse off if they'd stayed separate. It's all going to end in tears, as my mom used to say. Unions like the EU will never last because it's trying to meld things which are just too different.
It should just be a trade union and nothing more. That's all it needs to be.