The bloc said developments in Thailand this year, including the adoption of a new constitution and a pledge by junta chief Prayut Chan-O-Cha to hold elections in November 2018, meant it was "appropriate" to resume ties.
But the European Union repeated its call for the restoration of full democracy and said it was still concerned about harassment of human rights activists and the curtailing of free speech in Thailand.
A meeting of EU foreign ministers in Brussels said they considered it was "appropriate to pursue a gradual political re-engagement with Thailand".
EU ministers halted all official visits to Thailand and suspended the signing of a partnership and cooperation accord with Bangkok in June 2014 after the army ousted the elected government.
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But Prayut's election promise and other measures such as the end of prosecuting civilians in military courts for certain offences have persuaded the EU to re-engage.
The bloc said it would look at possibly resuming talks on a free trade agreement with Thailand -- as well as the partnership and cooperation accord -- "with a democratically elected civilian government under the new constitution".
The military has further enshrined its role by declaring that any future administration must adhere to its "legally binding 20-year-plan" for the country.
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