LOS ANGELES, March 26 (Reuters) - The United States should build on the North American Free Trade Agreement by negotiating a new free trade deal with the 27 nations of the European Union, Republican presidential candidate John McCain said on Wednesday.

"I am an unashamed and unabashed defender of NAFTA. I am an unabashed supporter of free trade agreements. In fact, it would be interesting ... to have a free trade agreement between ourselves and the European Union," McCain said in a speech to the World Affairs Council.

Democratic presidential candidates Barack Obama and Hillary Clinton have threatened to withdraw from NAFTA if Mexico and Canada do not agree to renegotiate the pact to include stronger labor and environmental provisions and to address critics' concerns about investment provisions of the longstanding pact.

Clinton also has vowed a "time-out" from new free trade agreements if elected president.

But McCain was enthusiastic about potentially uniting United States in a huge free trade zone with Britain, Germany, France, Italy and other members of the EU which has expanded into Eastern Europe and parts of the former Soviet Union.

"They are one of the largest economic blocs in the world, if not the largest ... I think to head a free trade agreement with the European Union would be a great thing to happen," McCain told reporters on board a plane bound for his next campaign event in Monterey, California.

"I notice that some of their environmental standards and labor standards are higher than ours, not lower. So it would be very interesting to see how ... the opponents of free trade agreements in general would react to that," the Arizona senator said.

The Unites States and the EU already have low tariffs on most of the manufactured goods that cross the Atlantic, and recently began an initiative aimed at eliminating regulatory barriers that impede commerce.

However, both sides have preferred to deal with the contentious agricultural issues within the context of world trade talks, rather than negotiate a bilateral free trade deal to completely phase out tariffs on each other's farm goods.

At the same time, some members of Congress have called for a services free trade agreement that would reduce or eliminate barriers to trade and investment in areas such as banking, insurance and telecommunications.