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Loyalist activist Jamie Bryson told the Northern Ireland Affairs Committee he was worried that the process of transition of paramilitary groups towards civilianisation had halted while concerns over post-Brexit trading arrangements remained.
After transport firm Morgan McLernon confirmed proposals to shut its Lurgan site, a political row has arisen between the DUP and anti-Brexit parties Sinn Fein and the Alliance Party.
Loyalist paramilitaries cannot be allowed to gain "a momentum" from the Northern Ireland Protocol dispute, MPs have been told.
Some steel exports from Great Britain to Northern Ireland are facing a 25% tariff because of changes to EU rules.