Deal with Italy, ultimately establishing pact (6)
I believe the answer is:
treaty
'pact' is the definition.
('treaty' can be a synonym of 'pact')
'deal with italy ultimately' is the wordplay.
'deal with' becomes 'treat' ('treat' can be a synonym of 'deal with').
'ultimately' suggests the final letters.
The last letter of 'italy' is 'y'.
'treat'+'y'='TREATY'
'establishing' is the link.
(Other definitions for treaty that I've seen before include "Pact, accord between states" , "Negotiation" , "Ratified agreement between states" , "Formal agreement between governments" , "Formal agreement between states" .)