The U.S. and Cuba has agreed to restore full diplomatic relations and open embassies in their respective capitals, President Obama announced Wednesday.

“More than 54 years ago, at the height of the Cold War, the United States closed its embassy in Havana. Today, I can announce that the United States has agreed to formally reestablish diplomatic relations with the Republic of Cuba and reopen embassies,” Obama told reporters at a press conference.

According to Anadolu Agency, Obama did not specified a date when the embassies would be opened but the announcement Wednesday sealed the initiative to mend diplomatic ties between the Cold War foes that was launched last December.

A statement from the Cuban government said the embassies would be officially opened July 20.

Describing it as a “historic step”, the American leader said when the U.S. shut its embassy in Havana in 1961, nobody thought it would take more than a half century to reopen it.

“There have been very real, profound differences between our governments, and sometimes we allow ourselves to be trapped by a certain way of doing things,” he added.

He acknowledged that “very serio us differences” remain between the two states including U.S.’s concerns about freedom of speech, assembly and transparency but he noted that the best way to help American values develop inCuba is engagement on the island.

“On issues of common interest, like counterterrorism, disaster response and development, we will find new ways to cooperate with Cuba,” he added.

Obama urged lawmakers to lift embargoes that prohibit Americans from traveling to or doing business in Cuba.

In a show of good faith toward detente, the U.S. and Cuba swapped prisoners last December, including American Alan Gross who was held for five years in a Cuban prison.

Three rounds of high-level talks have been held between the two states that resulted in the U.S. loosening travel and trade restrictions.

In April, Obama met with Cuban President Raul Castro during a regional summit meeting in Panama. It was followed by the removal of Cuba from a U.S. terror list in May.