- There are a lot of countries small/technically incompetent enough that this would be contracted out. The contracted-out CA companies would create a larger single point of failure than just one country.
- CAs are used for keys that sign a lot of things other than domains/websites. What about application bundles? Some of the eMudhra intermediates were for that purpose. Who operates those CAs? IMO "OS/app store vendors" is a good answer to this one, but that's not the status quo.
- What counts as a country? There are famously lots of disagreements there. So suddenly Microsoft (or whoever's preloading CA certs onto a lot of computers) has to be in the business of litigating what countries do/don't exist depending on where their devices will be sold. They don't want to do this and so will resist this proposal.
- Business/organization redundancy would be needed. Companies go out of business. Governments get deposed. Datacenters get bombed or hacked. There's no guarantee that CA root or intermediate private keys will be handed over to successor/backup operators when those things happen. Now you need <number of redundant CA operators> X <number of countries> CAs.
- What about non-cc TLDs? If you say "those are less secure and don't need to be country-locked", that's fine, but now you need some additional number of CAs.
- Governments, famously, don't go out of business when they screw up. So it becomes much harder to censure a misbehaving CA.
- When someone (e.g. browser/OS vendors) removes a country-locked CA for misbehavior, this now has to be reviewed as a political act, at which point many more cooks enter the should-we-revoke-this-cert kitchen. We know this from experience with ccTLD domain registrar politics. "We think you revoked Canada's CA because you're in a trade war with them, not because of your stated reason that they did something insecure" or "Don't revoke Canada's CA for using a private key of 124; we need to be nice to them because we're negotiating a trade agreement".
- The net number of CAs needed to operationalize such a system is large: current/legacy ones, plus country-specific ones times redundancy, maybe plus non-cc operators. That's a much bigger list of roots, with a proportionally much bigger risk of revocation/update churn. More churn means more devices running a larger variety of outdated/mismatched configurations, which means much more frequent certificate errors for users, which means an increased tendency to bypass verification or not perform it in the first place.
I agree that the status quo of "dozens of random companies with highly variable competence and affiliation" is bad and should change. I'm not sure that this proposal is better.