This step would be enacted specifically so that it could be argued that sex should be removed entirely.
This is straight out of the TRA playbook.
First, write into law that everyone has a 'gender identity'. It's compulsory.
Second, have the law recognise that 'female' 'girl' and 'woman' are primarily gender identities, rather than terms to recognise sex.
Third, argue that sex is now a redundant, exclusionary term, and we don't need it as a protected characteristic any more. Don't worry, all females are perfectly adequately covered under gender identity.
Fourth, now that actual females are legally indistinguishable from actual males in absolutely every conceivable circumstance, the law is set to more fiercely punish any woman who asserts she is not the same as any other woman.
Also, those people who have NO gender identity on account of they know it doesn't exist, are utterly stripped of any protection under the law and are non-women.
Now, about that exclusionary language in the maternity & pregnancy characteristic...