David Frost, the UK’s Brexit minister, has warned there is a “gap” between the EU and the UK negotiating positions as he enters talks with the European Commission over changes to the arrangements for trade between Great Britain and Northern Ireland.

The EU has offered to sweep away most customs and health checks on animal and plant products entering Northern Ireland under a revision of the current system but both sides privately recognise that fundamental differences remain between their visions for the future.

The EU has been “preparing for the worst”, with options ranging from imposing tariffs on UK imports to termination of the entire trade and cooperation deal in case Downing Street decides to kill the talks and suspend the current Northern Ireland protocol through triggering its article 16.

A group of EU member states known as the Washington Group met the Brexit commissioner, Maros Sefcovic, on Monday to be briefed about the proposals he announced on Wednesday. At that meeting, France, Germany and the Netherlands, with support from Spain and Italy, pushed for tough measures to be prepared.

One diplomatic source aware of the discussions played down the chances of the entire deal being terminated, however. “You would immediately lose all the main levers in the trade and cooperation agreement that can be pulled to put pressure on the UK, everything from tariffs to energy supply,” the source said. “It would be a short-term move and not in the EU’s interests. But tariffs in the short term is certainly something that people can get behind.”

Frost, while in Brussels for a lunch meeting with Sefcovic at the start of negotiations on revisions to the current protocol, said he had been “quite encouraged” that the EU had “definitely made an effort in pushing beyond where they typically go in these areas”.

But he offered some words of warning over the fundamental differences between the EU and Britain over the policing of the laws and regulations in Northern Ireland, which he has previously said come down to a matter of sovereignty.

He said: “We’ve got the commission proposals. Obviously ours are on the table as well, so we’re looking forward to good discussions and there’s a lot of work to do because there are gaps. The governance arrangements don’t work – we need to take the court out of the system as it is now and we need to find a better way forward. So all this is for discussion and I’m looking forward … but our position is clear, and it always has been, as set out in the command paper.”

The crucial issue is whether EU law in Northern Ireland will continue to be policed by the European court of justice (ECJ). The UK government believes it has been proved to be politically unsustainable for Northern Ireland to be under laws supervised by an EU court over which its own people do not have a say.

The UK government has shown little appetite for a possible compromise solution similar to the one offered to Switzerland, in which the ECJ would have an advisory role in disputes over the interpretation of EU law but where issues would be initially settled through an arbitration court.

The leader of the DUP, Sir Jeffrey Donaldson, has said the EU proposals “fall far short of the fundamental change needed”.

An EU official admitted, regarding the compromise suggested by some thinktanks in recent weeks: “The Swiss inspired model is that the court of justice remains at the apex of the system. I’m not sure how much that will change the deal from the UK perspective.”

Asked about the possibility for retaliatory action should the UK use article 16 to suspend parts of the Northern Ireland protocol, a European Commission spokesperson would not be drawn. He said: “What we are concentrating now on, is finding solutions for the people in Northern Ireland.”