If you really follow these steps, which I do not recommend, the manufacturer will not be able to patent the same product in other countries. By then the product will be a part of the common knowledge.
To answer your question: Not being able to patent an idea because it already exists is pretty common, but probably not very well documented... :) :)
I do not recommend the steps above, as they are wasting your resources. You do not need to wait till your application gets granted. And if you license your product within 12 months of the application, you may file new patents in different countries/regions claiming priority from the previous application.
The manufacturer, being not the owner the first application cannot claim priority. His "invention" won't be newer than yours.
I would try these steps instead:
- file an international patent application;
- license it to a manufacturer within 30 months of filing;
- decide the countries in which your patent application should enter together with the manufacturer.
Please also note, there is no such thing as a standard license agreement. It is a contract between you and the manufacturer. The conditions of this contract are based upon the agreement between you (your lawyer) and the manufacturer (its lawyer). Search for a lawyer skilled in licensing in order to avoid (common) pitfalls of licensing.