I've been having a frustrating time with national relations though and i'm not sure how they work. From what I can tell you start off with the same relations as the nation you choose, your nation's enemies are hostile and its allies are friendly to you. I guess this is to make sure enemy patrols won't just let you pass if you fly your personal flag.
However, it's frustrating because the personal relations don't seem to get better when your nations make peace. I've been RPing as a dutch merchant, and the Netherlands made peace with Portugal and Spain in-game but my personal relations remain 'hostile'. This now means that i'm seeing Portuguese and Spanish merchant fleets visiting Dutch ports and upon getting anywhere near them I get a "you are recognized" message and they attack. I've never once attacked a Portuguese or Spanish ship, and I'm still 'unknown', so I don't understand why these merchants should recognize my harmless barque immediately. It also means i'm unable to trade in Spanish ports despite our nations now being friendly.