1.My Privateers can sail into other countries cities and even use them as Panama Canals. MUST BE FIXED. I can leave my privateer in a dutch colony while waiting for their ships to come.
2.You don't need to build a port city. You build only interior cities and use a Native or another countries city as your port. If you have a ship and a wagon train in a native settlement you can move good between the two.

Wow, that is pretty bad. I had a related privateer bug. I posted it in Tech support before the Bug report forum was up:

http://forums.civfanatics.com/showthread.php?t=292951

I entered an Indian settlement with a Privateer and now I can't get out. The settlement is entirely surrounded with another colonial power's influence and it says that I risk declaring war if I leave the settlement.

Privateers are supposed to be exempt from minding boundaries, right? I'm not sure if the English influence was surrounding the settlement when I entered, but this bug has my privateer stuck!

Eventually I was at war with the English colonies, so I just sailed out after that.

I noticed that I too can't go into another territory without open borders without declaring war. It also quit giving me my plunder when outside of a coastal city. It gave it for a few turns, then quit.

I sure hope that this is fixed.

Syk, please explain the circumstances further. Nothing you said sounds like a bug to me.

I had the same problem.

To fix it and get my privateer back out of the Indian settlement without declaring war on the Dutch I went to CIV4UnitInfos.xml searched for privateer and changed <bRivalTerritory>0</bRivalTerritory> to <bRivalTerritory>1</bRivalTerritory>.