Jose Barroso, president of the European Commission, gave a presentation at Bloomberg headquarters in New York Friday afternoon, dividing his time about equally between the outlook for the proposed U.S.-EU trade agreement and the state of the European economy. He was pretty optimistic about both.

The trade pact was a big deal, he said. Conventional trade barriers such as tariffs and tariff-rate quotas between Europe and the U.S. are already low (5.2 percent on average for the EU and 3.5 percent for the U.S.), but the volume of trade between the two economies is so huge that eliminating them altogether would still have a big effect, he said. The gains from removing behind-the-border barriers (such as regulatory differences that discourage imports, accidentally or otherwise) would be great as well.

Some areas weren't going to see much progress, he said -- Europe and the U.S. just don't see eye to eye on genetically modified food, for instance. Nonetheless, Europe was ambitious for what might be achieved. He foresees a "living agreement" that will avoid backsliding and promote further liberalization in future.

Carter Keithley, president of the U.S. Toy Industry Association, asked what I thought was a good question. The U.S. and Europe both have complex rules to ensure that toys are safe -- but the details are different. Combining them into a single safety code will be difficult. Why not just agree that the regulations ensure toys are safe in both places and leave both standards in place, with the U.S. agreeing to accept the EU code as sufficient and vice versa?

This principle of "mutual recognition" was crucial in creating Europe's single market in the first place. If the U.S. and the EU could embrace it, the forthcoming agreement could indeed be a big deal.

Barroso didn't say he was against this approach, but I thought he equivocated. Yes, he said, we need either a common standard or mutual recognition. Well, that's obvious. The question is how far either the U.S or Europe might go in accepting the more effective trade-expanding principle.

My guess would be, not far. I think the resistance on both sides will be strong -- and especially, in fact, in the U.S. Mutual recognition is an erosion of sovereignty, which the U.S. takes more seriously than Europe.

Barroso's optimism on Europe's economic recovery, if you can call it a recovery, was harder to understand. This week the IMF's Christine Lagarde talked of a three-speed world: "countries that are doing well, those that are on the mend, and those that still have some distance to travel.” (In other words, fast growth in many emerging economies, slow growth in the U.S., and no growth in Europe.) The euro area's economy is still shrinking. Yet Barroso still thinks (or says he thinks) that policy has been mostly well-judged and the union will emerge stronger from its ordeal.

He noted early on that Europe's public debts still aren't high by U.S or Japanese standards. True -- and that's the point. The EU is insisting on austerity in its weakest economies even though, in the aggregate, its fiscal problem is manageable. The failure to create effective burden-sharing arrangements -- some form of limited fiscal union to work alongside its monetary union -- has been the euro area's biggest error, not counting the creation of the euro itself. And the consequences are crushing countries such as Spain and Barroso's own Portugal.

At their meeting in Dublin today, EU finance ministers agreed to extend repayment of the emergency loans given to Ireland and Portugal by an extra seven years. (To qualify, Portugal will have to find new budget savings to replace the ones thrown out by its constitutional court last week.) National parliaments in some of the creditor countries will have to endorse the change. If it goes ahead, it's a welcome gesture of flexibility -- but far too little and far too late.

(Clive Crook is a Bloomberg View columnist. Follow him on Twitter.)