vscode generates compile errors for valid test-jar dependencies

I have a non shipping "utility" maven module. It has a dependency on classes from a test-jar produced by another module. If both the utility maven module and the test-jar producing module are loaded in the workspace, vscode generates compile errors for all imported test-jar classes. See the first screenshot below. Note that the compile errors in vscode are incorrect and should not exist. In contrast, running "mvn clean install" results in a successful build and IntelliJ handles this situation fine (there are no compile errors).

If however the module that produces the test jar is not loaded in the workspace, there are no compile errors for the imported test-jar classes in vscode. See the second screenshot below. In otherwords, the compile error only shows up when the test-jar producing module is in the workspace with the test-jar consuming module. Apparently vscode/eclipse jdt cannot resolve the test classes when they are from a local project and imported by another project's src/main classes.

I will attach 2 small maven projects to demonstrate the problem. You can load them into vscode to reproduce. You can also build them from the command line with mvn to confirm they are valid.

Compile error when both test-jar consuming and producing projects are in the workspace

No compile error when the test-jar producing project is not in the workspace

test-jar-issue-projects.zip

Start by opening test-jar-issue-projects.zip in VS Code with both Maven projects loaded, then compare the diagnostics with a workspace containing only the consuming project. Run mvn clean install to confirm the projects are valid; done means local test-jar imports no longer produce false compile errors when both projects are present.