I think Canon have FEC(Flash Exposure) because previously their Consumer Class Flash like 380EX do not come with any manual Flash control. Therefore the EOS 50 Class and above have a FEC function to alter the flash Power.
Alternatively, some third party external Flash have ISO settings on the flash for both manual and auto mode. Therefore, if you use it on a camera body without FEC, For example the Rebel Class, you can set the Flash to Auto and adjust the ISO setting to offset the flash power.
I don't know, but I also think the effect should be additive.
Here's my logic,
If the Camera AI think it should fire at Full Power Flash,
If you've set the Camera FEC to -1 stop, it would send a request to the flash unit to fire at a power same as (Full Power - 1 stop) when you press the shutter.
If the flash's own compensation is set to -1 stop. It would reduce one stop power from the value requested by the camera.
Which means that the flash now will be firing at ((Full Power -1 Stop) -1 Stop) = Full Power - 2 Stop.
Someone please correct me if my deduction were wrong. :dunno:
For the previous Canon flash system ( ie the ATTL EZ flash systems on EOS 5, 10, etc systems ), the flash overrides the camera. In other words, it is NOT additive. It would be quite logical for Canon to continue this behavior in the ETTL EX flashses, but I don't know for sure since I don't have a 550EX to test it with.