The Smuggler's Union is the Brethren of the Coast Trade Union faction. In order to use the Auction House in a port ran by the Brethren, a player must be indifferent or better Reputation with the Smuggler's Union.
The faction standing can be raised by using Marks of Trade, doing junk merchant missions or sinking Varyag Pirates on the Open Sea.
Your faction standing will be lowered when sinking merchant ships belonging to the Smuggler's Union on the Open Sea.