# Philippines seeks zero Japan tariffs on farm and tobacco goods *Negotiators in Tokyo offer to reduce Manila's 20% passenger car levy in exchange for duty-free access on heated tobacco and fresh bananas.* **Published:** November 5, 2026 **By:** Yui Kobayashi **Section:** Trade & Industrial Policy — Japan **Format:** Policy Tracker **Confidence:** high **Source:** https://eastasiabrief.com/trade-policy/philippines-seeks-zero-japan-tariffs-farm-tobacco-goods-1162 **Publisher:** East Asia Brief (https://eastasiabrief.com/) --- ## What to know - Philippine Senate delegation requests zero tariffs on heated tobacco and farm exports - Manila offers to cut its 20% import duty on Japanese cars below 3.0 liters - Negotiators target concluding revised JPEPA framework before Nov. 30, 2026 ![Factory workers observe robotic arms assembling heated tobacco devices along an automated production line. (AI-generated image)](https://eastasiabrief.com/media/2026-11-05-8536fbc5c097.webp) *Factory workers observe robotic arms assembling heated tobacco devices along an automated production line. (AI-generated image)* Philippine lawmakers requested zero tariffs on heated tobacco consumables and agricultural goods during bilateral trade negotiations in Tokyo on Nov. 5, 2026, seeking expanded market access under the revised economic partnership. Senate President Sherwin Gatchalian led the congressional delegation alongside Foreign Relations Committee Vice Chairman Erwin Tulfo and Agriculture Committee Chairman Francis Pangilinan. The group presented the tariff proposals to Japanese Prime Minister Sanae Takaichi. Under the 2008 Japan-Philippines Economic Partnership Agreement, Japan levies seasonal duties of 8% and 18% on fresh bananas. The fruit accounts for roughly 80% of Japan's 1 million metric tons of annual banana imports. In exchange, the Philippine government offered to lower its 20% import tariff on Japanese passenger vehicles with engine displacement below 3.0 liters. Trade officials treat automotive concessions as Manila's primary counterweight in the bilateral negotiations. The proposed auto duty reduction directly affects Japanese automakers that rely on domestic manufacturing plants rather than Southeast Asian factories. Subaru imports 100% of its Philippine vehicle lineup directly from Japan, exposing its retail pricing to the duty. Mazda Motor ships roughly 90% of its Philippine passenger fleet from assembly plants in Japan. The 20% import tariff adds approximately $4,000 to the wholesale cost of an imported Japanese mid-size sedan before local dealer margins. Toyota Motor faces limited direct exposure because it maintains commercial vehicle assembly in Laguna and sources volume sedans from Thailand. Duty-free intra-ASEAN trade rules shield roughly 85% of Toyota's Philippine unit sales from the tariff. Japanese industrial parts already enter both markets under highly liberalized conditions established in the original 2008 treaty. Japan eliminated tariffs on almost all Philippine manufactured goods and electronic components immediately upon implementation. The official releases do not confirm whether the executive branch submitted a formal tariff petition covering industrial electronics components, and the Department of Trade and Industry has not published a revised tariff-line schedule. Philippine lawmakers instead focused their Tokyo discussions on processed consumables, requesting complete tariff exemptions for heated tobacco products. Heated tobacco sticks face standard Japanese import duties and separate domestic excise schedules upon arrival. Philip Morris Fortune Tobacco Corporation built a 9-billion-peso ($155 million) processing plant in Batangas to produce heated tobacco consumables. The company directs roughly 60% of its Philippine production capacity toward export markets across the Asia-Pacific region. Philippine growers shipped 2.93 million metric tons of fresh bananas globally in 2025, ranking as the world's second-largest exporter behind Ecuador. However, Philippine growers lost Japanese market share to Vietnamese producers that enjoy duty-free access under regional trade treaties. Duty-free treatment in Japan would eliminate an 8% to 18% cost penalty on Philippine Cavendish shipments, growers associations said. The tariff difference currently erodes supplier margins during winter months when Japanese customs collections double. Bilateral trade between the two nations reached $21 billion in 2025, according to Philippine government data. Japan remains the second-largest destination for Philippine exports and a primary source of industrial capital equipment. The Philippine Economic Zone Authority hosts 744 Japanese manufacturing locators that maintain cumulative investments exceeding 840 billion pesos ($14.5 billion). These facilities employ more than 300,000 Filipino workers across specialized automotive and electronics zones. Yazaki-Torres Manufacturing operates automotive wiring harness plants in Calamba that supply sub-assemblies to vehicle factories in Japan. Its components already enter Japanese manufacturing lines duty-free under the 2008 agreement's industrial chapters. Electronics assemblers and wire harness builders face administrative costs under existing documentation rules rather than direct tariffs. Exporters must submit detailed origin forms to qualify shipments under the bilateral preferential rules of origin. The Philippine Bureau of Customs is working with Japan Customs to expand electronic certificate of origin verification. Digital data exchange between customs desks would cut port processing delays in Manila and Batangas by several days. Manila is also balancing tariff discussions against its domestic electric vehicle promotion framework. Philippine Executive Order 12 suspended import duties on pure electric vehicles through 2028 regardless of the country of origin. Lowering duties on Japanese internal combustion models would compress the pricing advantage held by imported Chinese electric cars. Chinese automakers captured roughly 15% of the Philippine passenger vehicle market during the first six months of 2026. Philippine trade negotiators conducted an intensive round of technical talks in Tokyo between Oct. 23 and Oct. 26. Trade Secretary Maria Cristina A. Roque described that meeting as the final technical engagement before ministerial review. Trade Secretary Maria Cristina A. Roque said bilateral working groups aim to conclude technical negotiations and sign the modernized agreement before the end of November 2026. Any finalized protocol requires formal ratification by the Philippine Senate and the Japanese Diet before customs authorities can adjust duties. Senate Foreign Relations Committee Vice Chairman Erwin Tulfo said legislative leaders intend to expedite procedural review once ministers sign. The bilateral treaty took effect in December 2008 with a clause requiring formal review every five years. Formal revision talks remained frozen for over a decade until bilateral leaders agreed to reopen discussions earlier this year. ## Impact map | Event | Korea | China | Japan | Global impact | | --- | --- | --- | --- | --- | | JPEPA tariff renegotiation | no direct exposure, protected by Korea-Philippines FTA tariff schedules | EV exporters face narrower price gap if Japanese ICE tariffs drop to zero | Mazda and Subaru gain margin relief on Japan-built vehicle exports | Cavendish banana and heated tobacco trade flows tilt toward Tokyo | ## In this story - **Companies:** Philip Morris Fortune Tobacco Corporation, Toyota Motor, Mazda Motor, Subaru - **Tickers:** 7203.T, 7261.T, 7270.T - **Exposed:** Yazaki-Torres Manufacturing - **Policy:** Tariffs - **Impact:** Pricing, Supply Chain, Order Book ## Primary sources 1. customs.go.jp 2. inquirer.net 3. sunstar.com.ph 4. thechronicle.com.ph 5. mb.com.ph --- Cite as: East Asia Brief, "Philippines seeks zero Japan tariffs on farm and tobacco goods," November 5, 2026. https://eastasiabrief.com/trade-policy/philippines-seeks-zero-japan-tariffs-farm-tobacco-goods-1162