The proposal is being spun as granting the US and other governments the ability to ban potentially “objectionable” domain names, and seem keen on scoring political points by moving against the likes of .gay and .xxx TLD proposals.
It would also, however, give every government the ability to block those it considers politically objectionable, and would present major problems for new nations that haven’t achieved universal recognition in obtaining TLDs of their own.
One can only imagine the ramifications when fledgling nations like Kosovo, which has designs on the .ks TLD, face unilateral bans by Serbia, or when South Ossetia and Abkhazia are blocked by Georgia. One can imagine similar difficulties would have arisen historically if these provisions had been in place when, for instance, Israel and the Palestinian territories were granted TLDs.
