Regulation could affect a range of key areas but isn't it about time that the tobacco industry is finally regulated? There are several aspects of the tobacco industry included in Morgan Stanley Dean Witter's (MSDW) equity research, March 14 of 2001, on an industrial overview of tobacco stated in a report titled "Who Will Regulate Tobacco?" They believe that the World Health Organization (WHO) tobacco initiative has some important risks that investors will see as becoming increasingly high profile as the 2003 deadline approaches. First, WHO's aim and negotiation for Global Regulatory Authority by 2003 covers key issues such as advertising, promotion, packaging, excise tax, litigation, and health warnings. Second, WHO initiative represents one of the most serious new global regulatory threats to the tobacco industry, in their opinion. Third, WHO treaty will be legally binding, it's intended that the treaty will be passed into national law and compliance is enforced by national governments. Fourth, tackling youth smoking provides some upside companies" cooperation with WHO and positively addressing youth smoking could reduce political risk and therefore improve valuations, in their opinion. WHO wants and should be allowed to create a framework within which to become the global tobacco regulator, which MSDW sees as potentially one of the most important regulatory developments for several years.
Global Regulatory Authority by 2003 is a global tobacco control treaty that is being negotiated by WHO. WHO is a specialized agency of the UN that has 3,800 fulltime experts working for a tobacco treaty. Tobacco is one of the highest profile issues currently being addressed by the organization. The WHO treaty covers key issues such as advertising, promotion, packaging, excise tax, litigation, and health warnings. Advertising, promotion, and sponsorship is likely to be restricted significantly under a WHO treaty.
