In that context it means Finite State Transducer.

Basically it is a FSM (Finite State Machine) that generates an output depending on its input.

I don't think you lose too much meaning of his sentence if you replace FST by Turing Machines (the more usual comparison to lambda-calculus).

Ah, thanks. I thought the comment had some precise dualities in mind, but I guess not? (There is such a correspondence for CPS and SSA, cf Appel's paper.)