Things like guns and drugs are contentious though, because availability in one state of an "open borders" zone enables smuggling into other states, where they might be banned.

One could hope that the system would tend towards overall liberalism, but IME with the EU it's the opposite.

Over recent years, we have got mandatory registration of SIM cards right as an influential neighbor state did the same (official explanation by our government: because of terrorism threat, which is essentially nonexistent here), EU-wide ban on many useful chemicals which have been used in terror attack mostly in Britain and France, and I'm hearing that the Swiss (a Schengen member) are having their own problems with the EU over firearm regulations, even if they aren't an EU state.