On Sept. 25, the Oklahoma Governor’s International Team hosted an evening reception for attendees and participants of the 2014 International Canoe Federation’s World Cup and Pan-American Championships. Athletes from 29 countries competed from Sept. 25-28, 2014 in races along the Oklahoma River’s Boathouse District, and many OKGIT members and affiliates were there to see it happen.

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Jonathan Neff credits his interest in international business to a trip he took around the globe in 1979, which stimulated his lifelong interest in other cultures. In 1990, he put that globe trekking experience into professional practice when he co-founded the International Law Section of the Oklahoma Bar Association. Since then, he’s worked with clients doing business in many countries throughout the world.

As he closes in on his third decade of practicing law, Neff is a well-established counselor for domestic and foreign firms involved in international trade and global business. He recently spoke about his work, the challenges his clients face, and the opportunities that international business present for investment in Oklahoma.

Can you explain how an Oklahoma lawyer becomes an expert on international trade and global commerce?

“I’ve practiced business law in Tulsa since 1985. I’ve always been interested in international business law and obtained a master of laws degree in global business law. In 1990, I co-founded the International Law Section of the Oklahoma Bar Association. Since then, my firm has represented many companies involved in international trade and global business—both U.S. companies doing business abroad and foreign companies doing business here, handling transactions in more than thirty countries.

Recently, we’ve handled several cross-border corporate acquisitions, including representing buyers and sellers of foreign companies and setting up companies abroad. Last year we represented a U.S. company acquiring a Colombian company, set up a Hong Kong subsidiary for a U.S. company, and represented buyers in corporate acquisitions in Canada. Also, we frequently draft and negotiate international agency and distribution agreements and employment contracts.

The more business globalizes, the more need there is for lawyers who understand international business law. Most U.S. lawyers understand the legal concepts in contracts, but it helps to have experience dealing with foreign legal systems and cultures which can be as different as the languages they speak. It’s also helpful to have extensive contacts in law firms abroad who are a great resource when accessing foreign legal systems.”

What are some of the challenges that international clients have had in establishing a working relationship in Oklahoma? Or perhaps what obstacles have they faced in trying to establish businesses or relationships with Okla.-based firms?

“An individual from a foreign culture may speak English, but nuances of meaning may not be the same, giving rise to misunderstandings. Unless that person has spent a good deal of time in the U.S. and understands our business culture, fundamental assumptions may be different. Neither party should assume that they understand the intent of the other party until ideas are thoroughly discussed.

It’s important to get to know the other party on a personal level and spend time together before undertaking a business venture together. Each party should fully understand the goals and expectations of the other party.

And, of course, they should have a well-drafted, unambiguous and comprehensive written agreement. Being successful in international business is difficult enough without misunderstandings between the parties.”

What are the ways you feel the investment environment in Oklahoma could be improved for the international businesses?

“The Oklahoma Governor’s International Team cooperates with the Oklahoma and U.S. Departments of Commerce and other state offices to serve as a crossroads of information for international business activities in Oklahoma. These organizations do a great job of providing educational programs and promoting international investment in our state, but there is still room for improvement in communications relating to global business activities in Oklahoma.

Oklahoma companies have a long history of doing business internationally and are far more involved in international business than many Oklahomans know. For example, few people know that a handful of companies in Tulsa provide the majority of all heat exchangers used in refineries throughout the world. To raise awareness of the importance of international business to our state economy, we need to tell our state representatives that international business is important to Oklahoma. State government should continue to support global trade and international outreach efforts to promote Oklahoma as an excellent place for foreign companies to do business.”

How do you believe improved international trade relations with companies in Oklahoma can benefit both the state and international firms?

“Oklahoma has many advantages for foreign businesses seeking to locate in this country, including a central location, a low cost of living, an educated workforce, and a business culture that is both sophisticated and ethical. Foreign companies often chose to establish operations in a major gateway city like Houston or Chicago, but they would do well to consider the advantages of setting up shop in Oklahoma.

On the other hand, international business and trade offer many advantages to Oklahoma businesses, the most obvious being much larger international markets hungry for the quality of U.S. goods and the U.S. business ethic. It’s interesting to note that many foreign businesses readily accept U.S. courts or U.S. arbitration as the forum for dispute resolution, since they anticipate fair treatment in our justice system. With proper counsel and guidance, there are enormous opportunities for U.S. businesses, particularly equipment manufacturers, to expand through international trade. Growth of international trade can only lead to growth of investment in Oklahoma.”

Are there any success stories you can describe regarding a client you represented in terms of them seeking and investing in Oklahoma?

“It may be more helpful to describe a trend. Thirty years ago in Oklahoma, international trade and global business expansion were seen as the exclusive province for major national and international corporations, well beyond the reach of many smaller businesses.

Over the years, however, with the growth of the internet and global communications, smaller businesses have come to realize that they too can do business on a global scale. In the past decade, more of my clients are small to mid-sized companies accessing global markets and developing sophisticated global business organizations by engaging agents and distributors, opening branch offices, or forming subsidiaries abroad. With ongoing harmonization of trade regulations, in time international markets are becoming accessible to even the smallest businesses.”

If you would like to learn more about doing business or investment in Oklahoma, please visit the Oklahoma Governor’s International Team at www.OKGIT.com. The Governor’s International Team (GIT) is a group of citizens representing private industry, government, education and non-profits from across the state of Oklahoma who are dedicated to help shape a stronger Oklahoma in the global economy.

For more information about Jon Neff’s services, please visit www.jnefflaw.com or call (1) 918-599-8600.

Though outsourcing has been of increasing concern for more than a decade in the U.S., the phenomenon is not a new one. In the dark days of the Great Depression, the federal government explored any means necessary to put the country’s workforce back into the factories and offices of the United States. In order to combat the ill-fated 1930 Smoot-Hawley Tariffs, Congress passed the Foreign-Trade Zone Act. By designating specific geographic areas in or adjacent to Customs Ports of Entry, the act sought to expedite and encourage foreign commerce in the United States.

Foreign-Trade Zones were designed to alleviate the duty and import burdens on American businesses, thereby promoting jobs and investment at home.
In today’s connected world, where modern technology has mooted major logistical challenges that once plagued firms dealing with foreign vendors, the importance of Foreign-Trade Zones are a key component of keeping American employees and businesses working.

First, Foreign-Trade Zones provide important financial incentives for businesses, specifically by offering duty deferral on goods that enter the country. This includes a duty and quota charge exemption on imported goods that are later re-exported. Firms can also apply to the Foreign-Trade Zone board for an inverted tariff for duty reductions if a lower tariff rate will apply to the finished product when it leaves the zone in comparison to the tariff applied on foreign components.

In terms of logistic costs, firms can also benefit by being granted a weekly, single customs entry charge rather than paying multiple entry fees. The FTZ can also save time for businesses importing components by eliminating duties on rejected and defective items.

In its ongoing mission to promote both jobs and investment in Oklahoma, the state currently boasts four Foreign-Trade Zones. The Port of Catoosa’s FTZ 53 is located in the northeast portion of the state surrounding the Tulsa metropolitan area. Run by the City of Tulsa-Rogers County Port Authority FTZ 53 also contains two subzones in the Claremore Industrial Park and Claremore Regional Airport. Also serving the state’s northeast is The Port of Muskogee FT 164, which is run by the Muskogee City-County Port Authority. Located at the confluence of the Arkansas, Grand and Verdigris Rivers, the Port of Muskogee is a prime location to ship bulk cargo anywhere in the world via the McClellan-Kerr Arkansas Navigation System.

Oklahoma City’s FTZ 106 is located next to Will Rogers World Airport, with an additional 71 million living within a 500-mile radius of its operations. The site is near three interstate highway routes in I-35, I-40 and I-44, meaning it can provide next-day service to the entire country. FTZ 106 also boasts two magnet sites in Enid Woodring Regional Airport and the Shawnee Regional Airport in addition to a usage-driven designated site at VF Jeanswear in Seminole, Okla. Through the utilization of the recently upgraded Alternative Site Framework, FTZ 106 has streamlined its alternative site designation process. Alternative sites can be identified, appraised and approved in around 30-45 days.

Serving the state’s southeast and the nearby Dallas-Fort Worth area is FTZ 227. This zone is comprised of the three separate sites of the International Business Park of Durant, Okla., the Ardmore Industrial Airpark, and the Westport Industrial Complex, also located in Ardmore. FTZ 227 is in close proximity to Highway 69/75, the direct route from Laredo, Texas to Kansas City. This motorway also passes through both the Port of Muskogee FT 164 and Port of Catoosa FTZ 53. It is less than 100 miles from interstate highways like I-25, I-40, I-20 and I-45, and is within an hour’s drive of Dallas, a national cargo distribution center.

Oklahoma’s geographic location in the heart of the continental United States allows it to benefit from its four Foreign-Trade Zones. Companies based here or partnering with firms based in the state also stand to benefit from the advantages that come with an FTZ designation. If you would like to learn more about doing business or investment in Oklahoma, please visit the Oklahoma Governor’s International Team at www.OKGIT.com. The Governor’s International Team (GIT) is a group of citizens representing private industry, government, education and non-profits from across the state of Oklahoma who are dedicated to help shape a stronger Oklahoma in the global economy.

Tulsa Port of Catoosa photo courtesy of www.PortofTulsa.com

Founded in Hill, New Hampshire just a few years after the American Civil War, Red Devil Inc. has proven its adaptability to an ever changing global economy for more than a century. Manufacturing a line of over 400 tools and chemical products, the family-owned firm has made it a point of pride in maintaining profitability by understanding its production shipping costs. With these concerns in mind, Red Devil located it’s chemical production to Pryor, Oklahoma in 1973 in order to take advantage of its central location in relation to Chicago, where two of its largest customers were based. It also opened its office headquarters in Tulsa in May 2005 after deciding to shutter it’s New Jersey facility due to cost considerations. For Red Devil VP George Lee III, one positive in relocating his firm from New Jersey was the quality of the local workforce.

George Lee

George L. Lee, III

“It’s obviously industry dependent, but I feel that there is a great set of core values in the Oklahoman worker who gives a fair day’s work for a fair day’s pay,” said Lee. “Sometimes this gets overlooked by government agencies who concentrate more on tax incentives, rebates and other programs to lure potential inward investment.”

Red Devil’s Pryor operation boasts a state-of-the-art manufacturing facility in the state’s largest industrial park. Amongst the more than 70 tenants at MidAmerican Industrial Park are seven Fortune 500 companies. The 9,000 acre park is located in the geographic center of the U.S., and has access to nearby highway, railway, waterway and air transportation distribution points for those serving global markets “Logistics these days are quite sophisticated,” explained Lee. “So fears of being ‘landlocked’ are overblown in my opinion. If a company is time critical with either suppliers or customers, they will have to factor that into their locational decisions. When serving our customers, both domestic and international, we can use the Port of Catoosa for bulk transport or the interstate highway system for all points on land. If there are time critical shipments, there are also the air facilities available in Tulsa and Oklahoma City.”

Though Red Devil originally started out as a hardware and tools manufacturer, Lee estimates that 75 percent of its current sales are from its chemical products. Given that most of these products are water based, another draw for its investment in Oklahoma was the industrial park’s water and power infrastructure. Mid America boasts some of the lowest water costs in the country, one coal and two natural gas fired power plants and dual-fed electricity at wholesale rates to the park’s tenants.

Now entering its fortieth year in Oklahoma, Red Devil continues to provide its more than 400 products to international clients the world over. In doing so, it relies on the established relationships built up over decades of doing business, combined with its two person sales team in Pryor.

“We utilize foreign representatives,” said Lee, “And wherever feasible and economically viable, we try to find partners who will invest in inventory and distribute locally to their marketing areas.”

Given the challenges facing businesses since the 2008 financial crisis, Red Devil’s move to Oklahoma appears to have paid off. Largely unaffected by the economic strains affecting job creating businesses in other parts of the country, the state has maintained at worst, modest growth rates in each of the past four quarters. With its workforce, logistical infrastructure and positive economic climate, investment in Oklahoma looks to be a safe bet for firms of all kinds.

If you would like to learn more about international investment opportunities in Oklahoma, please visit the Oklahoma Governor’s International Team at www.OKGIT.com. The Governor’s International Team (GIT) is a group of citizens representing private industry, government, education and non-profits from across the state of Oklahoma who are dedicated to help shape a stronger Oklahoma in the global economy.