Wouldn't that also include every trader that quietly pays a pirate for passage instead of reporting them to the "authorities?"

No. There is a pretty big difference between somebody who does what is necessary to save their own life and ensure the success of their mission, and somebody who voluntarily does business with pirates while not under duress.

What it would include are those few wonderful traders who happily supply me with weapons and robots when I run low. But not the ones who simply pay when I threaten to kill them and take their stuff.