The deal is lengthy, complicated and is currently being poured over by the Democratic Unionist Party, Tory backbenchers and businesses across Northern Ireland.
The PA news agency looks at what is in the deal and why it is so significant.
– Why was the Northern Ireland Protocol a source of tension?
The protocol formed a key part of Boris Johnson’s Brexit deal. It was signed by the then-prime minister in 2020 and was designed to prevent a hard border on the island of Ireland.
To keep the border free-flowing, London and Brussels essentially moved new regulatory and customs checks required by Brexit to the Irish Sea.
The move introduced red tape on trade between Great Britain and Northern Ireland, creating a headache for many businesses and enraging loyalists and unionists who claim the region’s place within the UK has been undermined.
The row over the new arrangements has left Northern Ireland without a functioning devolved government, after the Democratic Unionist Party used its veto to bring down devolution in protest at the protocol.
Its boycott means a ministerial executive cannot function and the legislative assembly cannot conduct any business.
– What is in the new deal on trade?
The Windsor Framework, as the new set of arrangements will be called, was announced by Mr Sunak and European Commission president Ursula von der Leyen on Monday, with the Prime Minister claiming that the agreement “removes any sense of a border in the Irish Sea”.
The deal, which comes after months of negotiations, covers a range of areas including trade, VAT regulation and the role of Stormont in EU laws that apply to Northern Ireland.
At the core of the deal is the creation of a new system for the flow of goods.
Anything destined for Northern Ireland will travel there as part of a “green lane”, with significantly fewer checks. Anything that could cross the border and enter the EU’s single market will travel through a separate “red lane”.
The Government says that the new green lane will be accessible to the broadest range of traders across the UK, including small businesses wanting to bring goods into Northern Ireland.
The changes are also due to benefit food retailers, addressing many of the vocal concerns about the difficulties of moving British sausages into Northern Ireland as part of protocol rules on agri-food.
“If food is available on supermarket shelves in Great Britain, then it will be available on supermarket shelves in Northern Ireland,” Mr Sunak said at Monday’s press conference.
The deal will see supermarkets, wholesalers and hospitality companies all able to use the new green lane, with the requirement for health certificates for individual food products removed and the promise of “radically reduced checks” on foodstuffs.
Customs processes for parcels have also been scrapped, which will mean that parcels can be sent between consumers in GB and Northern Ireland without any additional requirements.
Travellers with pets have also been assured that under the agreement, they can now travel throughout the UK without the requirement of extra health treatments, new costs or extra documents.
The issue had been a concern for many, with the protocol creating a range of new rules for cats and dogs moving from Great Britain to Northern Ireland – including the requirement of an animal health certificate and a rabies vaccination.
If food is available on supermarket shelves in Great Britain, then it will be available on supermarket shelves in Northern Ireland— Rishi Sunak
As part of the deal, the legal text of the protocol has also been amended on VAT. Under current arrangements, EU VAT and excise rules for goods generally apply in Northern Ireland.
Mr Sunak has said that under his deal, this will change with the legal text of the protocol amended to allow the UK Government to “make critical VAT and excise changes for the whole of the UK”.
Alcohol duty, for instance, was mentioned – with Mr Sunak suggesting that the cost of a pint in the pub could be cut for Northern Irish drinkers.
The Windsor Framework also lifts the ban on seed potatoes moving from Great Britain to Northern Ireland.
– What is the role of the European Court of Justice under the agreement?
It had been expected that both the UK and the EU would try to find a way around the difficult role of the European Court of Justice (ECJ). Concerns about the oversight role of the court have been raised by the DUP and some Tory backbenchers, with the issue less about trade and more about sovereignty.
The ECJ had been final arbitrator of EU law issues in the region, given the fact that Northern Ireland essentially remains within the single market for goods.
The Government believes that the agreement significantly narrows the role of the ECJ, with a new approach set to address some of the concerns of a democratic deficit for Northern Irish representatives in the application of EU law.
That arrangement, dubbed the “Stormont brake”, is described in the agreement as giving Stormont a “genuine and powerful role” in deciding whether significant new rules on goods impacting life in the region will apply. It is set to function along the same lines as the Good Friday Agreement safeguard of the petition of concern.
Under that Stormont arrangement, 30 MLA signatures are needed to secure a valid petition, which then triggers a vote that requires a majority of both nationalist and unionist MLAs to pass.
It remains to be seen how the arrangement will be introduced into the Stormont institutions, if powersharing does return, but Downing Street has been clear that once triggered the brake will give the Government the power to veto any new or amended EU rule.
But speaking to reporters, Ms von der Leyen said the ECJ is the “sole and ultimate arbiter of EU law” and will have the “final say” on single market decisions.
She described the Stormont brake as something that would be an emergency mechanism that would hopefully not be needed.
– What does the EU think of the new deal?
Ms von der Leyen spoke highly of the efforts to reach a deal, calling it “historic” and one that opened a “new chapter” in UK-EU relations.
In Dublin, Taoiseach Leo Varadkar said that the EU had moved “a lot” to facilitate a deal.
“It’s a uniquely positive arrangement for Northern Ireland businesses in particular, that trade can flow freely back and forth from Britain to Northern Ireland, without any need for any checks or complications, provided those goods stay in Northern Ireland,” he said.
– When do the changes take effect?
The Prime Minister said that the new agreement would make a difference “almost immediately”, but it does seem that at least some of the changes will gradually come into effect at various times.
For instance, new arrangements for post and parcels will take effect from September 2024 – while some of the exact details around the implementation of the Stormont “brake” are still to be worked out.
But Downing Street has been clear that significant parts of the deal can be introduced even without Stormont returning immediately.
– What happens to the Northern Ireland Protocol Bill?
Boris Johnson’s controversial legislation to override post-Brexit rules on Northern Ireland has been jettisoned by the Prime Minister.
Brussels has agreed in turn that it will scrap its legal action against the UK, launched in retaliation over the former prime minister’s Northern Ireland Protocol Bill.
Downing Street believes that the new agreement means there is no longer legal justification for the Bill, which is currently in the Lords and was still being championed by Mr Johnson only last week.