This was implemented in the Applicant Guidebook as part of specification 5 (schedule of reserved names at the second level in gTLD registries) as follows: "Two-character labels. All two-character labels shall be initially reserved. The reservation of a two
character label string may be released to the extent that Registry Operator reaches agreement with the government and country-code manager. The Registry Operator may also propose release of these reservations based on its implementation
of measures to avoid confusion with the corresponding country codes".
And translated into the new gTLD Registry Agreement as: Specification 5 (Schedule of Reserved Names), Section 2: "All two-character ASCII labels shall be withheld from registration or allocated to
Registry Operator at the second level within the
TLD. Such labels may not be activated in the
DNS, and may not be released for registration to any person or entity other than
Registry Operator, provided that such two-character label strings may be released to the extent that
Registry Operator reaches agreement with the related government and country-code manager of the string as specified in the
ISO 3166-1 alpha-2 standard. The
Registry Operator may also propose the release of these reservations based on its implementation of measures to avoid confusion with the corresponding country codes, subject to approval by
ICANN".
Please note that the public comment forum closes on 10 July with the reply period closing on 1 August. The GNSO Council may want to consider during its next meeting whether or not to provide input on this topic.