What we received from FedEx about this error is:
"Fedex allows you to process Electronic Trade Documents (ETDs) to make international shipping easier, however not all destinations accept these electronic submissions. If you are trying to ship to a destination that does not allow for this and you have this option selected in your FedEx settings, it will need to be turned off to generate your label."
So the way to fix is to uncheck the "Create customs docs" checkbox. The customs docs then would have to be created manually. The details for that are here: