SEOUL, July 3 (Xinhua) -- The trade dispute between South Korea and Japan was feared to damage both economies as the two countries were intertwined in the global chain of supply and demand, South Korean media reported.

Citing an economic interdependence, Christian Broadcasting System (CBS) NoCut News said Wednesday that if the current friction develops into a trade war, it would inevitably pose damages to both economies of Japan and South Korea.

South Korea is Japan’s third-biggest exporting country and the fifth-largest importing nation, according to S. Korean media.

In the semiconductor sector, the bilateral interdependence was deeper. As of 2017, Japan exported 10.4 billion U.S. dollars of chip-related products to South Korea, taking up nearly one fifth of Japan’s total export to South Korea.

The report came after Japan announced a plan Monday to impose export restrictions from Thursday on three major materials to South Korea’s tech industry.

The materials included fluorinated polyimide, hydrogen fluoride and polymer resist used to produce semiconductors and display panels that inevitably affect the manufacturing of TVs and smartphones.

The South Korean government lambasted the measures, calling them an “economic retaliation” that ran counter to the spirit of free trade and the World Trade Organization (WTO) regulations. It vowed to file a suit with WTO against the Japanese measures and take other necessary steps based on domestic and international laws.

Local newspaper Seoul Shinmun forecast that the Seoul-Tokyo trade friction would not develop into a trade war as Japan would also be damaged by the prolonged trade dispute.

Given the inventory of the three materials, with which South Korean chipmakers can endure for two to three months, it could be an opportunity for domestic companies to reduce their excessive chip inventory, the newspaper said.

The global semiconductor industry had been rattled by the downturn in business cycle and the supply glut, leading to a sharp fall in chip price.

However, the local newspaper noted that the Japanese government was expected to maintain its aggressive position toward South Korea for the time being as the Japanese government believed that its deepened conflict with South Korea could benefit the Japanese ruling party in the upcoming parliamentary election later this month.

Chief Cabinet Secretary Yoshihide Suga of Japan said Tuesday that the tighter export controls to South Korea came as Seoul had failed to show a satisfactory solution to the ongoing wartime labor dispute between the two countries.

Japan has protested against the South Korean top court’s recent rulings that some major Japanese companies, such as Nippon Steel and Mitsubishi Heavy Industries among others, to compensate the South Korean victims who were forced into hard labor without pay during World War Ⅱ.

The Korean Peninsula was colonized by Japan from 1910 to 1945. South Korean historians said at least 700,000 young Koreans were coerced into the forced labor during the colonial era.

Japan claimed that the reparation issues were settled through the 1965 accord that normalized diplomatic relations between Seoul and Tokyo following the colonial era, but South Korea said the 1965 pact did not refer to individuals’ right to compensation for the wartime hard labor.

South Korea's Yonhap news agency said in a commentary that Japan’s economic retaliation linked to historical issues was “shameful beyond measure,” worrying that the complicated diplomatic row was not expected to be resolved easily.

The commentary noted that the Japanese measures had something to do with the upcoming parliamentary election, adding that it would not be good for the South Korean economy, which saw its export fall for seven straight months through June.