Exiting the European Customs Union creates a “hard border on the island of Ireland”, Sinn Féin has said.
Outlining her plans for the UK leaving the EU, Theresa May said Brexit means leaving the union.
It currently allows tariff and paperwork-free trade between the UK and the Republic of Ireland.
But the Prime Minister said: “Full membership of the customs union prevents us from negotiating our own comprehensive trade deals.”
She said she would now seek to negotiate a new customs deal with the EU, which would allow tariff free trade to continue.
However, If a deal cannot be achieved it could lead to the return of some form of customs checks along the Irish border.
What is a customs union and why does it matter?
A customs union is a form of trade agreement between two or more countries.
It means they decide not to impose tariffs (taxes on imports) on each other’s goods and agree to impose common external tariffs on goods from countries outside their customs union.
Setting common external tariffs is what distinguishes a customs union from a free trade area.
The key argument for leaving the customs union is that it will allow the UK to negotiate its own trade agreements.
Reacting to the Brexit speech, Sinn Féin MLA, John O’Dowd said: “Exiting the single European market, exiting the customs union, creates a hard border on the island of Ireland.
“Warm words, soft words from Theresa May mean nothing.
“She has agreement with no-one in these islands in relation to how to move forward.
“She doesn’t have agreement with the European Union on how to move forward.
“Her intentions to leave the Single European Market and her intentions to leave the customs union are going to have a detrimental impact on the economy in the north and across this island.
“It’s clear today from Theresa May’s Brexit statement that the views and opinions of the people of north have been completely ignored.”
Common Travel Area
Also in today’s speech, the prime minister said maintaining the common travel area between the UK and Republic of Ireland would be a priority during Brexit negotiations.
She said: “No-one wants a return to the borders of the past”.
“Our guiding principle must be to ensure that as we leave the European Union no new barriers to living or doing business within our own union are created.
“The United Kingdom will share a land border with the EU and maintaining that common travel area with the Republic of Ireland will be an important priority for the UK in the talks ahead.”
In a statement, a spokesperson for the Irish government said that while the prime minister’s comments may be seen as a warning of a “hard Brexit”, Dublin has been preparing for all possible models of future UK-EU relations.
Mrs May also said she hopes that the “main parties” in Northern Ireland will form a government as soon as possible in the “spirit of unity”.
NI Secretary James Brokenshire was legally obliged to call for the 2 March vote on Monday after the executive collapsed over a botched green scheme.
Stormont was plunged into crisis after the resignation of Martin McGuinness as deputy first minister last week.