In the past I've been hit with this same service fee levied by UPS. It's a shocker. When I've complained about it they say that it is "to pay brokerage fees and the cost of initially advancing the money to pay any import duty and GST (tax)". At times this "brokerage fee" can exceed the value of the shipment. I've since taken the practice of insisting that the goods be shipped "USPS" or else I'll do business elsewhere (Music123.com, take note*). Here's what one person in BC is doing about it!
http://www.cbc.ca/cp/Oddities/061024/K102418U.html