Um, that's good and all.... But how do you 'enforce' that? What I normally say when I blow the smuggler up is "Pay the fine or stay in Jail'. If they don't pay the fine and continue to trade in my system, he continues to get blown up.
Rheinland Military has a zero tolerance for pirates. I see nothing wrong with that. What else are we going to do but fight them? We can't talk over system chat and say, 'Come over here, Unioner. You're under arrest!" What do you think that Unioner is going to do? He is going to point his guns at me and start firing.