The European Union and Cuba have signed an agreement to normalise ties, paving the way for the 28-member bloc to establish full economic cooperation and aid with the Caribbean island country.

Cuban Foreign Minister Bruno Rodriguez witnessed the signing of the deal on Friday at a ceremony in the capital Havana along with EU foreign policy chief Federica Mogherini, who was visiting Cuba.

"This is a historic day for bilateral relations," Mogherini said, before EU negotiator Christian Leffler and Cuban deputy foreign minister Abelardo Moreno signed the deal.

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The agreement, which comes amid Cuba's thawing ties with the US, must now be ratified by the governments of the EU bloc and Cuba.

The accord establishes an ongoing political dialogue and sets parameters for commerce and aid, replacing a unilateral policy imposed by Europe 20 years ago that angered Cuba by pushing for changes to its one-party political system.

The culmination of nearly two years of intense negotiations for the agreement included the delicate subject of human rights, the issue that caused Brussels to suspend ties in 2003.

The deal comes just days before Barack Obama's scheduled visit to Havana on March 20, the first by a US president since Cuba's 1959 revolution.