Speaking in Downing Street, Michel Barnier demanded the Government give more “clarity” on what it wants from Brexit.
He warned of “unavoidable” barriers to trade if it leaves the customs union and single market.
Mr Barnier is visiting London for talks with Mrs May and Brexit Secretary David Davis.
After a three-course lunch with the pair, he said there was still “some divergence” between the two sides over transition.
WARNING: Michel Barnier told Theresa May Britain needs to make a choice
TALKS: Brexit Secretary David Davis with Michel Barnier
“The time has come to make a choice”
And Mr Barnier added: “The only thing I can say – without the customs union, outside the single market – barriers to trade and goods and services are unavoidable.
“The time has come to make a choice. The conditions are very clear, everyone has to play by the same rules during this transition.”
But the PM’s official spokesman said: “We want it to be as frictionless as possible and we think we can achieve that because it’s in the interests of the UK and the EU.
Conservative Party's leadership contenders
Theresa May's Tory government is currently looking anything but "strong and stable". An unconvincing election victory and lingering Brexit anxieties have been exacerbated by Michael Fallon's recent Cabinet resignation; while Priti Patel and Boris Johnson have also made serious mistakes. Here's some of the bookies' favourites to replace her as leader of the Conservative Party.Getty Images Gaff-prone Foreign Secretary Boris Johnson is favourite to succeed Theresa May at 4/1
“As with all these matters, it’s the beginning of a negotiation.”
Mr Davis said it was “perfectly clear” what the Government wanted.
He added: “There’s no doubt about it, we are leaving the customs union but we are aiming for a good future for Britain.”