The paper confirms that "as we leave the EU we will also leave the EU customs union".
"To be in and out of the customs union and "invisible borders" is a fantasy", he said on Twitter.
The UK Government's new paper setting out proposals for a future customs relationship with the European Union (EU) is now available on the gov.uk website.
The organisations called for a tariff-free goods trade agreement between the United Kingdom and European Union, regulatory equivalence and mutual recognition of standards on an ongoing basis to ensure continued mutual access for both goods and services, and a flexible system for the movement of labour and skills.
The Government will also set out its solutions to avoid a hard border between Northern Ireland and Ireland.
"What business is concerned about.is the infamous 'cliff edge, '" Britain's chief Brexit negotiator David Davis told the BBC, adding that the transitional period was most likely to last about two years.
But, crucially, the document published on Tuesday also makes clear that during this period, Britain would also expect to be able to negotiate its own global trade deals - something it can not do as an EU customs union member.
The government said it hoped for either "a new customs partnership with the EU...in a way that removes the need for a UK-EU customs border", or a new "highly streamlined customs arrangement...leaving as few additional requirements on EU trade as possible".
Former EU trade commissioner Karel De Gucht has warned that Brussels will find Britain's proposals "very problematic".
European Union officials have been sympathetic to a transition period post-Brexit but have reacted in the past skeptically to long-term technical ideas as a solution to customs and regulation obstacles to trade that would follow from Brexit.
The threat of cumbersome new customs checks is one of the key issues causing anxiety among businesses and senior ministers, alongside fears about intricate manufacturing supply chains being broken and long queues of lorries at cross-border ports when Britain leaves the EU. The proposed plan which will overrule the need for a physical post-Brexit border would see Britain and the European Union enforcing each other's customs rules.
"The government's ambitions for customs arrangements post-Brexit are, at present, just that, and it will take time and care to ensure that all the subtleties of current operations can be incorporated into future plans".
The CBI, which represents 190,000 businesses, said it welcomed the government's proposals.
Britain's Brexit minister, David Davis, said in a statement:"The UK is the EU's biggest trading partner so it is in the interest of both sides that we reach an agreement on our future relationship". So it would be free to pursue new trade deals during the transition.
Sir Keir Starmer, the shadow Brexit secretary, called the proposals "incoherent and inadequate" in response to pleas for certainty from British businesses.
But Labour MP Chris Leslie, a leading supporter of the Open Britain campaign group, accused ministers of "wanting to have their cake and eat it".