Michel Barnier, the European Union’s chief Brexit negotiator, has conceded that border checks within the UK may be necessary in the future as Brussels published a draft withdrawal agreement under which the Northern Ireland would effectively stay in the single market and customs union after Brexit.

The territory of Northern Ireland may be considered part of the bloc’s customs territory after Brexit, with checks required on goods coming in from the rest of the UK, to avoid a hard border on the island of Ireland.

As reported by The Guardian, under the draft withdrawal agreement, a raft of single market legislation would also apply to ensure the province stays in lockstep with laws of the Republic of Ireland that are relevant to the north-south flow of trade and in maintaining all parts of the Good Friday agreement that has kept the peace since 1998.

“A common regulatory area comprising the union and the United Kingdom in respect of Northern Ireland is hereby established,” the draft paper says. “The common regulatory area shall constitute an area without internal borders in which the free movement of goods is ensured and north-south cooperation protected.”

Downing Street insisted overnight that the prime minister would not sign up to “anything that threatens the constitutional integrity of the UK” amid claims that the EU is seeking to annex Northern Ireland.

Speaking on publication of the draft agreement, Barnier told reporters in Brussels: “This backstop will not call into question the constitutional or institutional order of the UK. We will respect that.

“We are just saying that on the island there are two countries, we need to fund the capacity for certain issues relating to the internal market and customs union, that we need to ensure the Good Friday agreement can function … We need to ensure there is regulatory consistency, alignment.”

As reported by The Guardian, Barnier also stressed the move would create a border between Northern Ireland and the rest of the UK. “In ports and airports there will be controls, but I would not refer to a border … I am not trying to provoke anyone here. And contrary from what I read there is no arrogance here. I am not being arrogant in any way.”

Barnier also appeared to suggest that Labour leader Jeremy Corbyn’s proposal for a UK-EU customs union could be key to solving the problem of the Irish border.

“The only thing I can say is that on the customs union this might be an element of the future relationship. But we’ll see what the position of the UK Government is first.”

Commenting on the draft withdrawal agreement, the Progressive Alliance of Socialists and Democrats (S&D) Group’s spokesperson on Brexit, Roberto Gualtieri, said: “We are pleased that many of our priorities have been included in the text. We welcome in particular the inclusion of the future partners and spouses in the scope of the agreement, the article which ensures that the full set of citizens’ rights are covered throughout the transition period, and the detailed provisions necessary to guarantee that administrative procedures will merely be a formality.”

On Northern Ireland, Gualtieri noted that both the UK and the EU have indicated throughout the process that they do not want to see any hardening of the border. “This was the basis of the joint report signed in December and today’s proposals translate that commitment into a legally binding text, ensuring that the fall-back position can be used if it is needed. It is clear that the other possibilities foreseen in the joint report should be explored in parallel to this. It is now up to the UK government to propose credible and viable alternative options: the ball is now in May’s court. In this respect, we welcome the speech of Labour leader Jeremy Corbyn which puts a customs union back on the table.”