Just because there appears to be some dispute and question about why UPS charges these fees, and why, and when, I'll clarify (I've become intimately familiar with their practices over time):
The fee you get from UPS (at least in Canada) is a brokerage fee. This is not levied by the government, but by UPS itself. The long and the short of it is, when UPS brings your parcel over the border, they need to sign a paper or two, and the brokerage fee is what they charge for signing that paper. Generally, the fee winds up being ~50% of your total package value - so if you order $200 worth of goods, it's a pretty safe bet your brokerage fee will be around $100. Lastly, and sadly, there is no way to escape this fee. It doesn't matter what your item is classified as, it doesn't matter who shipped it or from where (unless it was from within Canada). It has nothing to do with taxation or border fees. It's just UPS grabbing your cash in exchange for the effort of signing a slip of paper for you.
Just one of the many, many reasons we need an alternative.
The one and only way to escape the brokerage fee, I feel I should point out, is if your order is under $20 (not counting shipping). And thank god, because otherwise I wouldn't order a single thing from Shapeways. So as long as your total parcel value is less than $20, UPS won't bother to charge you.