The draft document aims to overcome decades of tension between Havana and the European Union over human rights on the communist island. Representatives from both sides have worked on the accord for almost two years, officials said on Friday.
"The deal marks a new phase in bilateral relations, a historic demonstration of mutual trust and understanding," EU foreign policy chief Federica Mogherini said at the Friday ceremony in Havana.
Cuban Foreign Minister Bruno Rodriguez, who also attended the signing, said the two sides would soon meet to revive a human rights dialogue they started in Brussels last year.
Both the European and the Cuban parliaments still need to ratify the accord.
Spain pushes for more trade
The arrangement allows the EU and Havana to cooperate on a series of projects, from environmental protection to modernizing Cuba's tax-collection system. Before the Friday deal, Cuba was the only country in Latin America without a cooperation deal with European bloc.
The EU suspended relations with Cuba in 2003, following the communist government's crackdown on media and civil society. According to officials, however, the two sides started the talks on restoring ties in April 2014, before Obama and Castro announced the US-Cuba rapprochement in December of the same year.
In addition, many individual EU members continued to maintain bilateral relations with Havana despite the bloc-wide break. Spain, which has close economic ties with the Latin American country, urged other EU members to "give EU businesses the chance to compete with American companies" ahead of the expected upswing in trade.
Embargo from 'another century'
While the EU already reached an agreement on trade, Washington has yet to lift its economic embargo against Cuba.
On Friday, Mogherini criticized the decades-old US sanctions.
"The US embargo is totally obsolete," she said. "The blockade is a measure that belongs to another century. Now the priorities are dialogue and cooperation."
In a key signal of diplomatic thaw, US President Barack Obama is scheduled to arrive in Cuba on March 20, marking the first visit by a US president in 88 years. The legendary rock band The Rolling Stones would also perform in the same week.
dj/sms (AFP, Reuters, AP, dpa)