Do you have a ton of positive feedback on eBay? If not I can see how the merchant would be wary. Sellers on eBay face a number of problems with international transactions like this, it's possible they assumed initially you were trying to rip them off.
Silly question but did you ever call the store? That's going to cut through problems like this most of the time.
Lastly I see a "Ships to" label, it says "United States". Sounds like you bid on an item that was really meant to ship in the USA only. They pre-set the shipping price at sub $20.
As a an eBay seller, I can safely say you are lucky they didn't cancel to begin with. They do not mention international shipping ANYWHERE on that auction.
Did you bid despite the fact that they specifically state this was supposed to ship in the USA only? Did you contact them to confirm it was ok.....
Personally I can see why THEY were apprehensive.
Edit: Just dug into this auction some more, they CLEARLY intended this to be a USA only auction as they do not have shipping options for other countries enabled. This is on you, and honestly I completely understand now why they treated you poorly. It would have been best for them to just cancel the auction as they are now out a bass, and shipping costs.
I literally just cancelled a sold auction for the same reason, I clearly marked it as USA only, someone in South Korea won and I ended up canceling and relisting. Sold price was much higher than I expected, but I was worried this scenario would occur.
I'm not a business so I can't absorb that cost, so it's back up and is still unsold.