I don't know, aside from reducing the cost associated with tracked options. I know there are a whole host of reasons why that's not easily done. It really would be beneficial if we could have a domestic, traced Lettermail option for Canadian sellers.
As far as I can see when I discuss this with my counterparts on eBay, the difficulty that Canadian sellers are facing is that when we can offer free shipping, it's really limited to Lettermail because all most of us can really afford to pad into our asking price is about two dollars. If we try to send something by Expedited Parcel, which is available to us through PayPal shipping at a discount, then we need to incorporate up to about $15, on average, into the asking price, just to be safe. If a Canadian buyer is looking at a similar item from an American seller, the international rate of getting it delivered across the border, providing they don't get assessed the import fees, is still similar. They feel that it's maybe not a good value to buy from a Canadian seller because the asking price is higher.
I don't want to assume that all my buyers aren't sophisticated enough to figure out that free shipping means that shipping is included in the price, but the truth of the matter is that not all buyers do realize that. They just think the Canadian sellers are asking too much. They consider the American purchase price to be a better deal, even though they have to pay more for shipping, potentially.