A step by the EU to prepare retaliatory trade measures in the event of the UK triggering its Northern Ireland Protocol Bill is viewed by the Government as a necessary step but one which it hopes will not be used.
Agreement has been struck at EU level to enhance post-Brexit enforcement powers through trade tariffs if the British government breaches its side of the agreement.
A spokesman for Minister for Foreign Affairs Simon Coveney said that the EU had to prepare such measures but "we hope it does not come to that".
The Government remains hopeful that agreement can be reached between the EU and the UK.
The proposed retaliatory measures were agreed this week following negotiations between the European Council and European Parliament.
As part of the agreed text the EU would also have the power to impose restrictions on trade, investment and other activities if the UK was to breach certain agreed trading conditions.
Seán Kelly MEP, a member of Fine Gael and the European People's Party, represented the European Parliament's International Trade committee as lead negotiator.
He said that while it was hoped the measures would never have to be taken, it remained the case that positive words from the British Prime Minister in relation to an agreement on the Northern Ireland Protocol have yet to be "translated into action".
"The mood music is much better and while I think we are going in the direction, the reality is the legal situation remains the same," Mr Kelly said.
It is expected that the retaliatory measures agreed this week will become law early next year.