Latin America could launch a wave of protectionism as a surge in the value of local currencies exposes the region to an influx of cheap foreign imports and threatens jobs. Policymakers in countries like Brazil, Peru and Chile have watched the real, the sol and the peso climb to multi-year highs against the dollar in recent weeks, and measures to offset the appreciation have so far had little impact. Drawn by higher interest rates in the fast-growing economies, foreign capital has ramped up the value of these and other currencies, making it harder for the countries’ firms to export, and easier for competitors to sell to them. Brazilian President Dilma Rousseff has led calls for South America to raise trade barriers to stem the flood of foreign imports. Any steps are likely to hit China hardest. “It’s imperative to defend Brazilian industry and our workers from unfair competition and from the currency war which is lowering our exports,” she said earlier this month as Brazil granted more than $25 billion to boost its sagging industry. “Our challenge is to do all we can without resorting to illegal protectionism,” Rousseff added. A global slowdown has given impetus to such concerns. Latin American nations see legal room to maneuver and some already have a number of curbs in place. For now, the level of trade restrictions imposed by Latin America as a region is lower than the global average, according to a study by economist and international trade consultant Ricardo Rozemberg. Things look different on a country-by-country basis. A scorecard from watchdog Global Trade Alert said Argentina was the world’s second most protectionist nation behind Russia, based on measures ranging from anti-dumping laws to import restrictions. Brazil, which placed number six, said in May it would apply non-tariff trade barriers on cars to protect manufacturers. China, the United States, Germany and France are those countries most affected by trade restrictions adopted by Latin American countries. CHINESE TARGET Last month, Brazil’s real hit a 12-year high against the dollar, exacerbating rising costs for its exporters. From 2006 to 2010, the cost to export per container from Latin America’s biggest economy doubled to $1,790, World Bank data show. U.S. costs rose by just 9.4 percent, to $1,050. The costs for Peru jumped 50 percent during the five years and by almost 400 percent in Venezuela. By contrast, Germany saw a rise of under 18 percent and Italy a mere 2.3 percent. The Union of South American Nations (UNASUR) has pledged to fight hot money piling in from abroad. Earlier in August the bloc said it would explore ways of raising economic coordination to redirect more commerce to Latin America. Yet with central banks lending at rates of up to 12.5 percent in countries like Brazil—compared to almost zero in the United States and Europe—investors seeking higher yields are not likely to exit Latin America’s currency markets soon. Foreign exchange pressures have squeezed margins among the region’s exporters, allowing Chinese competitors to build up market share, especially in the United States. Measures aimed at redressing this balance are expected to take aim chiefly at the world’s biggest exporter of goods. “Following the debate in Brazil and looking at Argentina to a degree, Chinese products will probably bear the brunt of the eventual punishment,” said Osvaldo Rosales, director of International Trade and Integration with the United Nations Economic Commission for Latin America and the Caribbean. Internal Squabbles Latin American nations have yet to take any concrete steps in response to the current turbulence. The extent of intervention will probably depend on how severe the economic slowdown in Europe and the United States becomes. “If the international monetary system and governance of financial reserves can’t resolve the current account imbalances and the movements they cause, there’s scope for countries to adopt these kinds of m