Paypal doesn't offer the most economical method of shipping internationally for folks in the US. They put it in for a short time but the system was so fully of glitches and bad design they reverted back to the previous label system.
If you accept Etsy's Direct Checkout for payments, you can print First Class International labels right from Etsy. If you take DC and don't see the link, you can wait until it is rolled out in your shop or join this team and have access to it right away:
Shipping Improvements Team
http://www.etsy.com/teams/10727/shipping-improvementsFor US sellers who don't take DC, like me, you can either pay for a service like the ones mentioned above, or...
We use a free USPS program called "Click-N-Ship for Business" (formerly the USPS Shipping Assistant) to print our First Class International labels, and it prints the customs form right on the label AND submits the customs form online meeting the new international mail requirements.
The program also tells you which mailing services are available and how much it will cost to ship the package. Then you just add stamps and mail:
International First-Class Mail: Print Labels From Your Computer
http://www.gotogreatpanes.com/blog/2008/02/20/international-first-class-mailprint-labels-from-your-c...Because you use stamps for the postage, if the package is over 13 oz you must hand it off to a postal worker (that's the case for domestic & international packages that are over 13 oz with only stamps for postage).
If it's under 13 oz, we leave it out in our mail box and the mail carrier just picks up the package when they drop off the daily mail.
I also like that it keeps a record of my labels so I can easily recreate them for repeat buyers and you can export the info at the end of the year for taxes.
If you don't know what rates to put in your listing for First Class International, this should help:
Getting a Handle on International Shipping
http://www.gotogreatpanes.com/blog/2008/02/21/getting-a-handle-on-international-shipping