The Canadian Bar Association's Sexual Orientation and Gender Identity Conference (SOGIC) wrote a letter urging the Minister of Public Safety to amend the regulations to be inclusive of transgender and gender non-conforming people.
A motion to repeal this portion of the Act was defeated 6 to 5 in a meeting of the Standing Committee on Transport, Infrastructure and Communities.
Where does this strange animus against transgender and gender non-conforming travellers come from? Why do legislators and policy makers freak out at the notion of trans folk travelling? Perhaps this clip from The IT Crowd (Series 3, "The Speech") explains it all:
... starting @ 1:30 on the clip:
Douglas: Oh, poppet. To think, when we met, you were so worried that you came from Iran.
April: What?
Douglas: When we met. As if I'd be worried about something like that. I don't care where you're from-- Iran, France--doesn't bother me. I'm very modern.
April: I'm not from Iran.
Douglas: Well you said something along those lines.
April: No, no--not Iran, a man. I said I used to be a man.