By David Ljunggren and Dave Graham
ARLINGTON, Va. (Reuters) - Negotiators at talks to modernize NAFTA are running out of time and look set to extend the remaining rounds in a bid to meet an end-year deadline as tensions rise, three sources familiar with the matter said on Sunday.
The Trump administration, which is demanding big changes to the North American Free Trade Agreement, has presented a series of hard-line proposals that partners Canada and Mexico say will be tough to accept.
Sources say neither nation will walk away from the talks, preferring instead to stay at the table and gradually work out what compromises they might be able to wrest from the U.S. side.
Another challenge is a very tight negotiating schedule - described as "insane" by one official - with rounds every 12 days or so compared with gaps of several weeks seen in more traditional trade talks.
"There is too much work to do and not enough time," said one of the sources, who requested anonymity because of the sensitivity of the matter.
The current round of talks in Arlington, Virginia, near Washington - the fourth in a planned series of seven - has been extended by two days to a full week, and the remaining three could also be lengthened, said two of the sources.
Officials are also starting to look at possible dates for extra rounds early next year, they added.
The three nations initially set an end-December deadline, citing the need to avoid a Mexican presidential election next year. Privately, officials now say that if the negotiations need to be extended, they could run till the end of February without causing too many problems.
People briefed on the talks describe the atmosphere as very tense amid increasing doubts in Canada and Mexico about whether the Trump administration really wants a deal.
U.S. negotiators have presented demands that would boost the North American content for autos, cut Mexican and Canadian access to government procurement, introduce a clause that could kill the deal in five years and end a trade dispute settlement system that has deterred U.S. antidumping cases.
Although trade between the United States, Canada and Mexico has more than quadrupled since 1994, Trump blames the pact for hundreds of thousands of lost manufacturing jobs in the United States and a $64 billion trade deficit with Mexico.
(Writing by David Ljunggren; Editing by Jonathan Oatis)