Bogdan, this code you wrote isn't too hot...

blink_LED:

PORTA.1 = 1
PAUSE 1
PORTA.1 = 0

GOTO blink_LED

You're turning your LED on for 1mS and then IMMEDIATELY turning it off again... so your eye will probably see your LED ON all the time, but certainly my eye can't catch a blink where the ON state is 1mS and the OFF state is a couple of uS.

Correct that to something like...

blink_LED:

PORTA.1 = 1
PAUSE 250
PORTA.1 = 0
PAUSE 250

GOTO blink_LED

Also, another mistake you made, you want PORTA.7 to be an INPUT, by stating PORTA=%00000000 you're forcing it to be an OUTPUT, delete that line.