The UK legislation, if passed by Parliament, will remove the EU's power to impose checks and tariffs in the event that there is no EU-UK-agreement, giving that power instead to the British government.
The meeting of the UK-EU Joint Committee, co-chaired by Mr Gove and Mr Sefcovic, comes after the Speaker of the US House of Representatives insisted there was "absolutely no chance" of a US-UK trade deal if the Northern Ireland peace process was jeopardised.
The EU said the on-going situation had "seriously damaged trust" and it would take legal action against Britain.
Former Tory chancellor Lord Norman Lamont and leader Michael Howard have voiced alarm over Boris Johnson's plans to introduce legislation overriding key elements of the Withdrawal Agreement (WA), which they say would break worldwide law.
The 27-nation bloc says the planned law dealing with Northern Ireland trade would destroy what little trust remains between the two sides.
The Withdrawal Agreement is also known as the Brexit deal that Prime Minister Boris Johnson struck with the European Union, it ultimately allowed the United Kingdom to leave the EU with a deal on 31 January 2020 and enter into a transition period.
Britain's decision to break global law by overwriting part of the EU Withdrawal Agreement has alarmed European leaders and threatens to scuttle the fragile negotiations on future UK-EU relations now being held in the British capital.
"The UK has not engaged in a reciprocal way on fundamental European Union principles and interests", European Union chief Brexit negotiator Michel Barnier said in a statement.
He said the provisions in the Bill relating to the Withdrawal Agreement had to be dropped by the end of September and that the European Union would "not be shy" about taking legal action if the Government refused.
The European Parliament's lead lawmaker on Brexit said that even if a free trade agreement is struck, the EU legislature will refuse to ratify it unless Britain drops a proposal to override parts of the legally binding withdrawal agreement.
"The fact they're saying they're doing this because they signed the agreement in a hurry and didn't realise its implications is hardly a convincing argument".
It addresses the Northern Ireland Protocol - an element of the deal created to prevent a hard border from returning to the island of Ireland.
But neither side has yet threatened to collapse the trade talks, which are due to resume in Brussels next week. The EU is sensitive to keeping competition with Britain fair after Brexit. An open border underpins the peace agreement that ended decades of violence in Northern Ireland.
"If I had done that when I was prime minister the Conservatives would have accused me of breaching the rule of law, they would have thrown everything at us and said 'you can not ignore an global treaty that you signed only a few weeks ago and you negotiated". Both sides say that unless there is an agreement by next month, Britain is facing an economically disruptive no-deal exit on January 1.
He confirmed that the European Union "expects the letter and spirit of this Agreement to be fully respected" adding that "violating the terms of the Withdrawal Agreement would break global law, undermine trust and put at risk the ongoing future relationship negotiations".
Tory rebels in the House of Commons and wider opposition in the House of Lords are likely to make it tough to get the Internal Market Bill passed as it stands, according to two officials.
He followed Howard who said that the prime minister had "no mandate from the British people to break treaties".
And while boasting of its newly minted trade deal with Japan, the government was warned that the ructions over Northern Ireland could deprive it of another glittering prize - a similar pact with the United States.